Accelerating demand from India and China will keep demand for gold robust throughout 2010, according to the World Gold Council (WGC).
According to the WGC’s Gold Demands Trends report for the second quarter of 2010, total gold demand rose by 36% to 1,050 tonnes compared with second quarter of 2009.
Meanwhile, over the same time period, investment demand for gold surged by 118%. The WGC says it is the result of uncertainty in the global economic recovery and the spill over of European sovereign debt concerns.
The report says: “Economic uncertainties and the ongoing search for less volatile and more diversified investments such as gold, are likely to underpin demand for investment gold in the immediate future. In particular, European retail investors appear to be making an increasingly important contribution to investment demand, with lingering concerns over public debt levels and the euro helping to drive demand.” (article continues below)
The report adds India and China will continue to provide the main thrust of demand growth, particularly for gold jewellery. for the rest of 2010.
“The WGC believes support on the demand side of the gold market is expected in coming months,” says the report. “First, the gold price has experienced a pullback since the end of the second quarter due to short-term profit taking and a seasonally weak period for gold jewellery. Secondly, speculative positions have turned neutral and thirdly, the third quarter tends to be a seasonally strong period for gold jewellery.”