India, China driving gold demand despite high price: Council

August 18th, 2011 - 1:10 pm ICT by IANS  

London, Aug 18 (IANS) Accounting for over half of global gold demand, India and China have driven the sales of this precious metal to near-record levels during the first half of this year despite high prices, says a leading international lobby for this industry.

“Gold’s strong start to the year was reinforced during the second quarter of 2011 when total global gold demand measured 919.8 tonnes, worth a near-record $44.5 billion, with broad-based support across all sectors and geographies,” said the World Gold Council.

“Standout markets were India and China, as these two markets accounted for 52 percent of total bar and coin investment and 55 percent of global jewellery demand,” the council said in a report released here Thursday.

The organisation said despite a higher gold price, Indian and Chinese demand grew 38 percent and 25 percent respectively during the second quarter of this year, compared to the same period of 2010.

“This growth is likely to continue, due to increasing levels of economic prosperity, high levels of inflation and forthcoming key gold purchasing festivals.”

Demand in value terms grew 5 percent year-on-year, reaching $44.5 billion, up from $42.6 billion in the second quarter of 2010. “This is the second highest quarterly value on record, only fractionally below the $44.7-billion record in the fourth quarter of 2010.”

The organisation said the impact of European sovereign debt crisis, the downgrading of US debt, inflationary pressures and the still-fragile outlook for economic growth in the West are all likely to drive high levels of investment demand for the foreseeable future.

“The strength of demand in India and China, coupled with an overall drop in recycling activity this quarter, demonstrates that consumers have adjusted to the current price environment,” said Marcus Grubb, the council’s managing director for investment.

“In addition, ongoing macro economic uncertainty, the continued sovereign debt crisis and widespread inflationary pressures, will result in gold demand remaining strong,” he added in the report.

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