ADVERTISEMENT
Accelerating demand from India, China will support robust gold market: WGC
Mumbai, August 25, 2010
Accelerating demand from India and China as well as increasing global investment demand driven by continuing uncertainty over public debt and economic recovery will keep the demand for gold robust during 2010, the World Gold Council (WGC) said today. The WGC's Gold Demands Trend report for the second quarter of 2010 published today said demand for gold for the rest of the year would be underpinned by the following market forces: • India and China will continue to provide the main thrust of overall growth in demand, particularly for gold jewellery, for the remainder of 2010. • Retail investment will continue to be a substantial source of gold demand in Europe. • Over the longer-term, demand for gold in China is expected to grow considerably. A report recently published by The People’s Bank of China and five other organisations to foster the development of the domestic gold market will add impetus to the growth in gold ownership among Chinese consumers. • Electronics demand is likely to return to higher historic levels after the sector exhibited further signs of recovery, especially in the US and Japan. "Economic uncertainties and the ongoing search for less volatile and more diversified assets such as gold will underpin investment demand for gold in the immediate future," Mr Marcus Grubb, Managing Director, Investment at the WGC, said. "Further, in light of lingering concerns over public debt levels and the euro, European retail investor demand has increased significantly," he said. "Over the past quarter, demand for gold jewellery in key Asian markets has been challenged by rising local prices. Nevertheless, we are seeing a deceleration in the pace of decline in demand, providing a strong outlook for ongoing recovery in this crucial market segment," Mr Grubb added. According to the WGC's Global Demand Statistics for Q2 2010: • Total gold demand
• Investment demand was the strongest performing segment during the second quarter, posting a rise of 118% to 534.4 tonnes compared with 245.4 tonnes in Q2 2009.
• The largest contribution to this rise came from the ETF segment of investment demand, which grew by 414% to 291.3 tonnes, the second highest quarter on record.
• Physical gold bar demand, which largely covers the non-western markets, rose 29% from Q2 2009 to 96.3 tonnes.
•
Global jewellery demand remained robust in Q2 2010. In the face of surging price levels, consumption totalled 408.7 tonnes during the second quarter of 2010, just 5% below year-earlier levels.• Gold jewellery demand in India, the largest jewellery market, was little changed from year-earlier levels, down just 2% at 123.0 tonnes. In rupee terms, this translates to a 20% increase in the value of demand to Rs 216 billion.
• China saw demand for gold jewellery increase by 5% to 75.4 tonnes
3. While growth in demand in tonnage terms was hindered by extreme weather conditions, the growth in the local currency value measure of demand was 35% to RMB 19.8 billion.• With the return of demand for consumer electronics, industrial demand grew by 14% to 107.2 tonnes, compared to Q2 2009.
"While many investors turned to gold as a ‘flight to quality’ in response to the uncertain financial environment, this interest has proved resilient even though a sense of optimism has started to return to some sectors of the investment community. In addition to the ETF market and physical bar and coin market, the demand for gold through internet based investment platforms is likely to provide further sources of investment demand," Mr Grubb added.
The WGC is funded by the world's leading gold mining companies and its mission is to stimulate and sustain the demand for gold.
NNN
