RTRS : U.S. Q2 gold demand up 10 pct despite weak jewelry
NEW YORK, Aug 19 (Reuters) - U.S. gold demand in the second
quarter rose 10 percent year-over-year as nearly doubled
investment demand offset weaker jewelry buying, according to an
industry report by the World Gold Council released on
Wednesday.
"What you would expect from an economic crisis is depressed
jewelry demand all over the world, and the U.S. is certainly
not immune," George Milling-Stanley, WGC's managing director of
government affairs, told Reuters prior to the release of its
quarterly "Gold Demand Trends" report.
"The economic crisis has battered the whole luxury goods
category, not just gold jewelry," he said.
For the second quarter, total U.S. demand for gold rose to
50.6 tonnes, up from 46 tonnes a year earlier. Jewelry demand
dropped 19 percent to 27.5 tonnes, while net retail investment
jumped 91 percent to 23 tonnes, the WGC report said.
Gold investment flows -- though lower than the highs seen
following the collapse of Lehman Brothers in September 2008 --
have more than compensated for the ongoing weakness in U.S.
jewelry demand, the report said.
The WGC is a trade group funded by the gold mining industry
to promote the metal.
Milling-Stanley said that the past three quarters was a
"dire period" in terms of retail luxury goods.
Budget conscious consumers are moving toward cheaper
gold-plated jewelry, and jewelers will not easily restock until
demand shows sustainable signs of improvement and credit
conditions ease, the report shows.
In the gold investment sector, Milling-Stanley said, SPDR
Gold Shares (GLD) should continue to boost gold demand as
longer-term investors allocate a portion of their portfolios
into bullion.
SPDR Gold is the world's largest gold-backed
exchange-traded fund, which held more than 1,000 tonnes of
physical gold bullion.
The ETF's bullion holdings have fallen about 6 percent to
1,065.49 tonnes, down from its record high of 1,134.03 tonnes
on June 1.
"Some of the investors may have decided it is safe to go
back into equities and other investments. We are not surprised
to see the small outflow," he said.
For the next several quarters, the WGC said, the annual
rate of decline in jewelry spending should continue to become
less severe.
"As we start to see some return to growth in the levels of
economic activity, we will, over the next few months, start to
see the beginning of a recovery of jewelry demand and
industrial uses as well," Milling-Stanley said.
(Reporting by Frank Tang; Editing by Walter Bagley)
