Gold consumption down 12% in Q1

Specifically, they bought 12.6 tons of gold bars and coins, and 4.6 tons of gold jewelry.

WGC Head of Central Banks Shaokai Fan said the decline was partly because demand in the first quarter of 2022 was the strongest it had been in a first quarter since 2007.

Gold consumption surged during the Lunar New Year (Tet) festival, which fell in January, before tailing off in February and March as the price rose. The average world gold price was US$1,890 per ounce in the first quarter of this year.

Phu Nhuan Jewelry Joint Stock Company (PNJ) saw net revenues of VND9.753 trillion ($413.3 million) in the first three months of this year, down slightly from a record high in the same period last year.

At PNJ’s annual meeting in late April, chairwoman Cao Thi Ngoc Dung said the first quarter of a year was always the peak sales season due to the Lunar New Year holiday, the God of Wealth Day and Valentine’s Day.

But she admitted that sales had been weak this year and would likely become weaker in the coming months.

She predicted that gold demand would then have a good chance of recovering at least somewhat in the last three months of the year.

According to financial expert Phan Dung Khanh, in the first half of last year, gold prices surged sharply but demand was also remarkably high. He said the gold market was “effervescent” then.

But in the first quarter of this year, economic growth in Vietnam decelerated, especially in Ho Chi Minh City.

“During tough economic times, people are cautious about spending. They prioritize spending money on daily life, not on gold purchases,” Khanh said.

In addition, other investment channels have begun to show signs of escaping from recent rock bottoms, he said. He noted that the stock market improved at the beginning of this year, so it attracted money away from gold.

Khanh said that weaker demand for gold is a good sign for the economy, because gold investments are considered “dead money.”

He argued that money put into gold was money not put into savings accounts, which is needed to help banks mobilize capital for lending and spur the economy.

Global gold demand decreased 1% to 1,174 tons in the first quarter of this year, according to WGC.

Consumption of gold jewelry remained stable at 478 tons thanks to increased Chinese purchases after the Covid lockdown was lifted, offsetting weak demand in India.