Gold demand totalled 4,076 mt in 2015, 2.1% lower than 4,165 mt a year earlier, whilst the market remains in surplus for a second year despite a drop in supply, the latest survey by Gold Fields Mineral Services showed Tuesday.
Total supply totalled 4,274 mt in 2015, 2.3% lower than 4,375 mt a year earlier, whilst the fourth quarter saw the first supply deficit for 7 quarters, at 42 mt.
Demand was 2.3% higher in the fourth quarter of 2015 at 1,087 mt, with supply 7.3% lower at 1,045 mt.
The decline in supply is due largely to a drop in global mine supply of 4% in the fourth quarter, according to GFMS, the largest quarterly decline since 2008.
The company forecast global mine output to shrink in 2016 and show the first annual decline since 2008.
India remains the largest consumer of gold for the second year, according to the survey, with total demand at 702.9 mt in 2015, up over 6% from 662 mt a year earlier, following a jump of almost 14% in the fourth quarter to 203 mt.
"The lower gold price in rupee terms, as well as festive and wedding-related demand helped to buoy consumption," GFMS said.
China is again in second spot with a fall of 11% to 563.7 mt in 2015, down from 633.3 mt a year earlier, and a drop of nearly 5.8% in the fourth quarter to 138.9 mt.
GFMS said the decline was due to disappointing sales during the labour holiday period in October and contributed to the lowest fourth quarter off take since 2010.
GFMS is predicting a stronger performance for gold in 2016, following a third consecutive decline for gold prices in 2015.
"Slowing Chinese growth and the negative outlook for the yuan should benefit gold in the medium term, and once there are clear signs of a price recovery, or at least, stabilization we should see investors coming back to the market," GFMS said.
Whilst market sentiment will benefit from persistently low inflation which should help keep interest rates lower for longer, the company concludes.
"We expect a slow recovery in 2016 in dollar terms, with the gold price trading above $1,200/oz towards the end of the year, and averaging $1,164/oz."
The London Bullion Market Association Gold Price settled at $1,114.70/mt Tuesday morning, up $8.10/mt on Monday's close, to its highest level this year.
