Consumers in China and India helped drive demand for gold jewellery up in 2010, reaching a 10-year high in tonnage.
According to the World Gold Council’s (WGC’s) Gold Demand Trends, annual demand last year totalled 3812 tonnes (worth approximately $150 billion US) and the metal’s price reached $1421 US per ounce on the London PM fix.
WGC attributes part of this to a strong recovery in the jewellery sector, which experienced a 17 per cent increase to 2060 tonnes from 1760 tonnes in 2009. Together, China and India accounted for 51 per cent of total jewellery and investment demand in 2010. The outlook for 2011 for both markets is expected to remain positive, the report states.
The council also notes a shift in central bank policy toward buying gold as a factor in higher demand.
“Emerging country banks are likely to continue purchasing gold as a means of preserving national wealth and promoting greater financial market stability,” said WGC managing director for government affairs, George Milling-Stanley.
“Any gold sales from advanced economies are unlikely to be significant as the official sector remains highly risk-averse. Collectively, the official sector is still a significant holder of gold. Central banks remain committed to its importance and relevance in maintaining stability and confidence as they have been for hundreds of years.”
While investment demand fell by two per cent compared to 2009, it was the second highest year on record at 1333 tonnes ($52 billion US). WGC predicts this sector to remain strong in 2011 on ongoing uncertainties over the global economy, inflation, and currency fluctuations.
