LONDON, May 3 (Reuters) - Gold demand posted its weakest
start to the year in a decade, the World Gold Council said on
Thursday, as prices of the metal stagnated and the threat of
rising interest rates led investors to seek better returns
    Global gold demand totalled 973.5 tonnes in the January to
March period, down 7 percent year on year and the weakest first
quarter since 2008. That coincided with a period of calm in the
gold market, which saw prices hold within their narrowest range
of any quarter in more than a decade. 
    "The rangebound gold price has certainly had an effect on
investor sentiment," the WGC's head of market intelligence
Alistair Hewitt said. 
    "It works both ways - for people in the retail space, a
price drop can be an entry point, and if the price is rising,
people want to take advantage of that momentum." 
    The biggest drop in demand came from the investment sector,
with bar and coin consumption down by 15 percent and buying of
gold-backed exchange-traded funds two-thirds lower year on year.
    Jewellery consumption was also soft, edging down 1 percent.
Buying in India, the second biggest gold jewellery consumer
after China, posted its third weakest quarter in a decade,
falling 12 percent year on year to just under 88 tonnes. 
    "A weakening rupee really pushed up the local gold price,"
Hewitt said. "You also had far fewer auspicious days. In Q1 last
year, you had 22, and in Q1 2018 you just had seven. Auspicious
days are important for weddings, and weddings are important for
jewellery demand." 
    Chinese jewellery demand rose 7 percent to 188 tonnes, which
Hewitt attributed to strong seasonal buying and a better product
range. "It really stems from (jewellers) becoming better at
meeting the needs of the Chinese millennials," he said. "We're
seeing more 18 carat jewellery, more 22 carat jewellery, better
designs, better products."
    Coin and bar demand in China was down 26 percent, however.
    Central bank demand was 42 percent higher, and close to its
quarterly average over the previous seven years. Russia was the
biggest official sector buyer, responsible for just over a third
of central bank demand. Turkey and Kazakhstan also added to
    On the other side of the market, mine supply grew 1 percent
year on year to 770 tonnes. Added to a return of producer
hedging - which sees mining companies selling production forward
to lock in prices - that helped lift overall supply by 3 percent
to 1,063.5 tonnes.
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