Gold “’ global demand
is down by 11%
 
London, England — MININGREVIEW.COM — 27 May 2010 – International gold demand “’ which has dropped 11% in the first quarter of 2010 from the prior three months “’ is expected to be strong this year on increased investment and higher jewellery usage.

Announcing this in a report released here today, the London-based World Gold Council revealed that global consumption had fallen to 760.2 metric tonnes in the quarter as exchange-traded fund investment and jewellery demand had slowed. Jewellery usage was likely to rebound this year as western manufacturers restocked, Indian buyers became more accustomed to higher prices and China’s economy continued to expand, it added.

The report went on to say that bullion had rallied to a record this month, and that gold was heading for a tenth annual gain “’ the longest winning streak since at least 1920.

“There has been a recovery despite higher prices” for jewellery in Asia, Council investment research manager Eily Ong said in an interview. “The economic crisis in Europe isn’t going to be resolved in the next month or two. Investors have now strongly moved into gold as somewhere safe to store their money.” Ong declined to forecast demand figures or give price estimates for this year.

“There’s been a surge in purchasing of gold bars and coins,” Ong said. “ETF inflow could continue and provide more investment for the rest of 2010.” Jewellery demand fell 7.9% from the fourth quarter to 470.7 tonnes, but was up 43% from a year earlier.

“Strong demand from India, the world’s biggest jewellery buyer, shows domestic consumers have adjusted their price expectations,” Ong said “The Chinese are still continuing to catch up. There will be a strong pickup because of economic growth and increasing income. And manufacturers, mainly in the U.S., last year ran down inventories and may need to start restocking,” she added.

Industrial and dental use for gold was almost unchanged from the fourth quarter at 103.2 tonnes and up 31% from a year earlier. Mine production slipped 9.2% to 611 tonnes from the prior quarter, and scrap supplies declined 15%to 343 tonnes.