Gold demand to remain robust in 2011: WGC

Sustained momentum in Indian and Chinese jewellery demand will support the growth throughout 2011.

Gold demand will continue to remain robust throughout 2011,on the back of another strong quarterly performance and sustained demand for jewellery in India and China and uncertainty over the US economy and the dollar,the World Gold Council said on Thursday.

“High investment demand across the world,strong demand in India and China,the continued strength of the technology sector together with central bank purchasing demonstrates gold’s diverse demand drivers. We anticipate continued strong demand during the rest of 2011,” WGC Managing Director,Investment,Marcus Grubb said in a release here.

The prevailing global socio-economic conditions will continue to drive investment demand for gold,conntinued uncertainty over the US economy and the dollar,ongoing European sovereign debt concerns,global inflationary pressures and continued tensions in the Middle East and North Africa,WGC Gold Demand Trends report for Q1 2011 said.

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Similarly,sustained momentum in Indian and Chinese jewellery demand will support the growth throughout 2011.

This was seen in India during the recent ‘Akshaya Tritiya’ and the beginning of the wedding season that boosted extensive purchasing supported by dip in gold price,it said.

The net purchasing by the official sector is also likely to continue in 2011 as central banks are turning to gold as a means of diversifying their reserves into an asset,it said.

Central bank purchases jumped to 129 tonne in the quarter,exceeding the combined total of net purchases during the first three quarters of 2010.

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The demand in the first quarter of 2011 grew by 11 per cent to 981.3 tonne from to 881.0 tonne in the first quarter of 2010 due to rise in demand for bars and coins and an improvement in jewellery demand in key markets.

In value terms,it saw a rise of about 40 per cent to USD 43.7 billion from USD 31.4 billion in the same period of 2010,WGC Gold Demand Trends report for Q1 2011 said.

During the first quarter of the year,investment demand grew by 26 per cent to 310.5 tonne from 245.6 tonnes in the same quarter last fiscal.

Investment demand in value terms stood at USD 13.8 billion mainly driven by demand for bar and coins,which went up by 52 per cent year-on-year to 366.4 tonnes.

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Meanwhile,ETFs and similar products witnessed net outflows of 56 tonnes or USD 2.5 billion.

Jewellery demand in the first quarter of 2011 also registered a gain of 7 per cent to reach 556.9 tonne from 521.3 tonne last year.

This equated to a record quarterly value of USD 24.8 billion in India and China,the two largest markets for gold jewellery,which together accounted for 349.1 tonnes or 63 per cent of the total,a value of USD 16 billion.

In Q1 2011,gold supply declined by 4 per cent to 872.2 tonne from 912.1 tonne in the first quarter of 2010 due to a sharp increase in net purchasing by the official sector and a fall in the supply of recycled gold,which was down 6 per cent at 347.5 tonne from 369.3 tonne same quarter of last fiscal.

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Mine production increased by 7 per cent to 44 tonnes compared to last year.