PERTH (miningweekly.com) − Gold demand increased by 11% year-on-year to 981,3 t, worth $43,7-billion, in the first three months of 2011, driven mainly by strong growth in the investment sector and momentum in the Chinese and Indian jewellery markets, the World Gold Council (WGC) reported on Friday.
Investment demand, comprising demand for bars and coins, as well as exchange-traded funds (ETFs), grew by 26% to 310,5 t in the quarter. China displayed the strongest growth and is now the world’s largest single investment market.
WGC MD for the Far East, Albert Cheng said that near term inflationary expectations and rising income levels were likely to support the investment case for gold in China.
The main investment in the three months to March came from bar and coin demand, which increased by 52% year-on-year, to 366,4 t. In value terms, this represented a near-doubling of demand to $16,3-billion, from the $8,6-billion in the first quarter of 2010, commented WGC MD for investment Marcus Grubb.
Cheng also stated that increasing prosperity in China, the world’s most populous country, coupled with their high affinity for gold would serve to drive demand in the long term.
China is already the second-largest gold consuming market in the world and the WGC said that demand from that country would double in the next ten years.
Jewellery is still the most dominant category of the Chinese gold market, accounting for almost 64% of the demand last year.
In its ‘Gold Demand Trends’ report for the 2011 first quarter, the WGC said that China’s jewellery demand jumped 21% year-on-year to a record $142,9 t, while demand from India – the main pillar of jewellery demand – rose 12% to 206,2 t.
Together, the two countries accounted for 63% of the total first-quarter gold jewellery demand.
Globally, jewellery demand reached 556,9 t, equivalent to $24,8-billion in value terms, in the first quarter. This represents a 7% increase from the 521,3 t in the same period last year
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Supply of the precious metal declined to 872,2 t from the 912,1 t in the first quarter of last year.
Grubb said that the decline was owing to a sharp increase in the net purchasing of gold by the official sector and a fall in the supply of recycled gold, which was down 6% year-on-year, to 347,5 t.
Mine production increased by 44 t year-on-year, at a growth rate of 7% from earlier levels. The WGC said that the increased production came from across a range of countries and reflected a combination of new project start-ups, expansions and the restarting of suspended operations.
African operations contributed about one quarter of the increase in first-quarter mine production.
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