World Gold Demand

 

Historically gold is always in demand as currency, collateral, for innovative industrial use and to adorn wearers worldwide. As current international finance markets become unstable, gold is in more demand.

According to the World Gold Council in 2009 dollar demand for gold remained above the $US100 billion mark for the second year in row against the rollercoaster in the financial and commodity markets. The average gold prices in 2009 were 12% higher than in 2008, at $US972.35/oz. Total identifiable gold demand in tonnage terms fell 11% to 3385.8 tonnes during 2009 compared to 2008 levels.

Industry reported trends indicated that total demand in 2009 increased due to strong jewelry and industrial demand. Gold retains its intrinsic value despite prevailing market conditions.

The World Gold Council estimated that in 2009 the 49% recovery in jewelry demand from a very weak first quarter was driven by a rebound in the Indian market enabling it to maintain its position as the world’s largest gold consumer. China was the only gold jewelry market to grow (6%) in 2009.

The World Gold Council also acknowledged that identifiable gold investment in 2009 was up 7% relative to 2008, but down 50% compared to the peak levels reached during the final quarter of 2008. When including inferred investment, which includes the over-the-counter market, then total investment in 2009 was double the levels of 2008, but much of this was in the first quarter.

China was the only non-western country to record growth (22%) in investment demand in 2009. More generally strong investment in western markets offset weak levels of investment demand in non-western markets.

Significant drivers in the gold market were also apparent on the supply side in 2009, with the first quarter comprising the majority of the 11% annual increase in supply when compared to 2008 levels. The single biggest contributor to the first quarter rise was recycled gold as consumers took advantage of gold’s higher trading range.

The gold mining supply is expected to increase in 2010. Australia could see a 10 – 11% increase in production. Egypt has returned to gold mining after many decades of inactivity. According to official forecasts, output in 2010 is projected to exceed the country's total production of the entire 20th century. The Egyptian government estimates the country's gold output in 2010 at 300,000 ounces, a vast increase to the less than 1,000 ounces mined in 2009.

As world markets continue to fluctuate and the imposition of new economic regulations and policies change the world of finance, gold will continue to be in demand.

 

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