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LONDON: Gold demand is being lifted this year by a recovery in jewellery buying in the key Indian market, and robust growth in Chinese gold consumption, the World Gold Council said on Wednesday.
Releasing its third-quarter Gold Demand Trends report, which showed a 12 per cent year-on-year rise in gold demand in the third quarter, the WGC said jewellery consumption in particular looked set to improve on last year's level.
"The main drivers for this year are the impact of the Indian and Chinese markets," said the WGC's research manager Eily Ong. "In 2010 in total, jewellery demand could actually exceed that of 2009."
Concerns over the global economic outlook and currency market stability have supported investment in gold this year, helping it to a record $1,424.10 an ounce last week. But identifiable investment levels are below 2009's stellar levels.
Investment demand almost halved in the third quarter from the previous three months, during which concerns over euro zone sovereign debt levels fuelled a surge in investment in bullion.
But Ong said jitters remain in the wider financial markets, caused by measures such as the United States' quantitative easing policy announced earlier this month, which could still lead to another jump in investment.
"If there is continuing uncertainty over the impact of QE2 and uncertainty over what is happening with the Asian market -- whether they will continue to tighten policy, or whether whatever they are doing now will succeed in curbing inflation -- we could probably see what we saw in Q2 again," said Ong.
"There could be more investors allocating their assets into gold as a store of value, and for capital preservation."
Demand for investment products such as gold exchange-traded funds softened in the third quarter. ETF demand was down 7 per cent year-on-year to 38.7 tonnes, less than a seventh of the "exceptional" flows seen in the second quarter.
INDIA BUYS
But other forms of demand rose. Jewellery buying climbed 8 per cent to 529.8 tonnes in the last quarter, accounting for 57 per cent of total demand. In the second quarter jewellery buying accounted for just 40 per cent of overall consumption.
India bought nearly 50 tonnes, or 36 per cent, more gold jewellery in the third quarter than in the same period of the previous year, bringing its jewellery consumption in the quarter to 184.5 tonnes.
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Saturday, March 12, 2011
Gold Demand: India & China Jump to Unbelievable New Records
Click here for the Gold Investing Profits Blueprint, a must-have report for investing in gold stocks
Click here to learn how to buy physical Gold and Silver
By Adrian Ash
Forget central banks and Western "haven" demand. Indian and Chinese households drove 2010's surge in gold demand...
PENSION SAVERS and investors hoping to defend their standard of living as global incomes converge, take note, advises Adrian Ash at BullionVault.
Ten, even five years ago and less, precious-metals analysts thought rising incomes in Asia would see gold substituted for other financial services or consumer goods. But no. China's private demand has more than doubled as a proportion of gross household savings. Based on the World Gold Council's latest data – issued today in the market-development and research group's new Gold Demand Trends report – India's private consumption jumped in 2010 to a new all-time record of more than 963 tonnes.
That volume beggars belief. It's equal to 2.65% of GDP on the International Monetary Fund estimate. On BullionVault's own analysis, it equated to more than 11.5% of India's gross household savings.
Yes, the WGC's data are subject to revision, of course, and they can only ever be an estimate.
But for Western savers hoping to defend their standard of living, it's plain commonsense to consider buying a little of what Asian households are using to store ever more of their fast-growing wealth.
You can forget about central banks impacting the market – net gold buyers in 2010 though they were, as a group, for the first time in two decades. Don't dwell on "safe-haven" Western demand either...other than to note how new Gold ETF demand and "unallocated" trading in the wholesale, off-exchange market both slipped 45% from 2009's record highs, while coin and bar demand surged worldwide. Because Indian and Chinese households are the knock-out story from 2010's data. The world's two most populous nations, its fastest-growing major economies, and numbers one and two for physical gold buying, both India and China set new records for private gold demand by value and volume in full-year 2010. On our reading of the new World Gold Council data, per capita consumption also set fresh records in the top two demand countries.
How come? Just as in gold's developed-world bull market of the 1970s, rising inflation and sub-zero real rates of interest are setting the pace. Productivity and real household wages are rising, however, in sharp contrast to the economic path which the rich West took four decades ago. So Asia's deep love of gold – and ever-deepening pockets – suggests perhaps a different path from the post-bubble slump which gold prices suffered as Western economies recovered and grew during the 1980s and '90s. Because emerging Asia buys gold when times are good.
Developed-world Gold Investment rose amid the financial crisis starting 2007, even as world jewelry demand sank. Emerging Asia tempered and even reversed its buying as global GDP turned down, with private consumers in India – a net importer every year since the Great Depression (the world's No.1 consumer has got virtually no domestic mine output) – actually becoming net exporters of gold in the first quarter of 2009.
The economic rebound, so much more pronounced in emerging Asia than the rich West, has seen those trends switch over. Because even with the Eurozone deficit crises driving a jump in physical demand for Gold Bars and coin (particularly in Germany), net demand for new units of gold ETF shares actually slipped 45% from 2009's record. So too did "unallocated" trading in London's wholesale market.
You've got to go a long way to over-state the strength of physical gold demand in 2010. The Dollar price rose 26%, but total global demand still grew 9% by volume, hitting its highest tonnage since the long bear market of the 1980s and '90s hit rock-bottom in 2000.
Gold then averaged $279 per ounce, rather than 2010's average of $1224. Yet in tonnage terms, global physical demand – led by emerging Asia's big giants – was like the bull run hadn't even got started.
A Must-Have Report for Buying Gold Stocks
Learn How to Buy Gold Below Spot Prices
Click here to learn how to buy physical Gold and Silver
By Adrian Ash
Forget central banks and Western "haven" demand. Indian and Chinese households drove 2010's surge in gold demand...
PENSION SAVERS and investors hoping to defend their standard of living as global incomes converge, take note, advises Adrian Ash at BullionVault.
Ten, even five years ago and less, precious-metals analysts thought rising incomes in Asia would see gold substituted for other financial services or consumer goods. But no. China's private demand has more than doubled as a proportion of gross household savings. Based on the World Gold Council's latest data – issued today in the market-development and research group's new Gold Demand Trends report – India's private consumption jumped in 2010 to a new all-time record of more than 963 tonnes.
That volume beggars belief. It's equal to 2.65% of GDP on the International Monetary Fund estimate. On BullionVault's own analysis, it equated to more than 11.5% of India's gross household savings.
Yes, the WGC's data are subject to revision, of course, and they can only ever be an estimate.
But for Western savers hoping to defend their standard of living, it's plain commonsense to consider buying a little of what Asian households are using to store ever more of their fast-growing wealth.
You can forget about central banks impacting the market – net gold buyers in 2010 though they were, as a group, for the first time in two decades. Don't dwell on "safe-haven" Western demand either...other than to note how new Gold ETF demand and "unallocated" trading in the wholesale, off-exchange market both slipped 45% from 2009's record highs, while coin and bar demand surged worldwide. Because Indian and Chinese households are the knock-out story from 2010's data. The world's two most populous nations, its fastest-growing major economies, and numbers one and two for physical gold buying, both India and China set new records for private gold demand by value and volume in full-year 2010. On our reading of the new World Gold Council data, per capita consumption also set fresh records in the top two demand countries.
How come? Just as in gold's developed-world bull market of the 1970s, rising inflation and sub-zero real rates of interest are setting the pace. Productivity and real household wages are rising, however, in sharp contrast to the economic path which the rich West took four decades ago. So Asia's deep love of gold – and ever-deepening pockets – suggests perhaps a different path from the post-bubble slump which gold prices suffered as Western economies recovered and grew during the 1980s and '90s. Because emerging Asia buys gold when times are good.
Developed-world Gold Investment rose amid the financial crisis starting 2007, even as world jewelry demand sank. Emerging Asia tempered and even reversed its buying as global GDP turned down, with private consumers in India – a net importer every year since the Great Depression (the world's No.1 consumer has got virtually no domestic mine output) – actually becoming net exporters of gold in the first quarter of 2009.
The economic rebound, so much more pronounced in emerging Asia than the rich West, has seen those trends switch over. Because even with the Eurozone deficit crises driving a jump in physical demand for Gold Bars and coin (particularly in Germany), net demand for new units of gold ETF shares actually slipped 45% from 2009's record. So too did "unallocated" trading in London's wholesale market.
You've got to go a long way to over-state the strength of physical gold demand in 2010. The Dollar price rose 26%, but total global demand still grew 9% by volume, hitting its highest tonnage since the long bear market of the 1980s and '90s hit rock-bottom in 2000.
Gold then averaged $279 per ounce, rather than 2010's average of $1224. Yet in tonnage terms, global physical demand – led by emerging Asia's big giants – was like the bull run hadn't even got started.
A Must-Have Report for Buying Gold Stocks
Learn How to Buy Gold Below Spot Prices
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