Consumer purchases will reach as much as 1,000 tons in India and China this year, the World Gold Council says. That would exceed China’s record of 778.6 tons in 2011 and approach India’s all-time high of 1,006.5 tons in 2010.
The flow of metal from west to east led Australia & New Zealand Banking Group Ltd., Deutsche Bank AG and UBS AG to open vaults in Asia this year. Central banks also are storing more metal, adding 535 tons to reserves last year, the most since 1964. They may buy another 350 tons in 2013, the World Gold Council predicts.
That’s being offset by the sale of bullion from exchange- traded products, with investors selling 731 tons valued at $30 billion this year, data compiled by Bloomberg show. ETP assets reached 1,900.8 tons yesterday, the lowest since May 2010. Paulson, the biggest investor in the SPDR Gold Trust, the largest gold ETP, cut his stake in the product by 53% in the second quarter, a government filing showed.
Barrick Gold Corp., the biggest producer, said Aug. 1 it may sell, close or curb output at 12 mines from Peru to Papua New Guinea. The Toronto-based miner announced $8.7 billion of writedowns in the second quarter and cut its dividend by 75% after prices plunged. Its shares fell 50% in New York trading this year.
The rout in gold may spur mining companies to resume selling future output to lock in returns, reversing a decade- long trend that added demand as producers closed out positions. Hedging will rise to 35 tons in 2014 from 20 tons this year, Barclays Plc predicts.
The industry will “slowly return” to forward sales, Charles Carter, an executive vice president at AngloGold Ashanti Ltd., said at a conference in Rome on Sept. 30. The Johannesburg-based company is the third-biggest producer.
“A lot of gold has been held for speculative purposes, investment and a store of value, and that’s less of a reason going forward,” said Robin Bhar, an analyst at Societe Generale SA in London and the most accurate precious-metals forecaster over the past two years. “If you sell your gold and put your money into equities, other fixed-income assets or real estate, you’re going to show a return. The gold bull market is definitely over.”