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The worldwide demand for gold is expected to remain strong throughout the year on account of economic uncertainties, and a strong push from China to get its citizens to buy more of the precious metal, the World Gold Council said.
Riding on the back of strong demand from investors looking to diversify from corporate stocks, and hedge themselves from mounting sovereign debt, worldwide demand for bullion during the second quarter shot up by 36 percent to reach 1,050 tons.
In the quarter ending June 30, investment in the yellow metal more than doubled as compared to the corresponding period last year. This was mainly because there was a sharp rise in buying of bullion exchange-traded funds. There was an increase of 29 percent in net retail investment, while buying of gold ETF shares rose by a whopping 414 per cent, as per the London-based council said.
As much as 291.3 tons of the precious metal was purchased in ETFs by investors during the second quarter. This brought the total holdings to more than 2000 tons (the second biggest inflow till date) translating into $81-billion. Of this, more than $50-billion is with the SPDR Gold Shares trust (set up by World Gold Council in November, 2004).
With demand rising to 37.7 tons in the last quarter -- an increase of 121 percent -- the Chinese market has come to rank amongst the strongest retail investment markets. Poor performance by the country's real estate and stock markets combined with the government's initiatives to increase domestic consumption have been cited by the World Gold Council as reasons for increase in gold demand.
China is not the only market showing healthy demand for gold. The German market shot up 59 percent, while the US market rose 32 percent. There were only three markets that showed a decline in gold investments. Japan was the largest among such markets where there was a net sell off of 20 tons in the last quarter.
Overall, the second quarter saw global supply climb by 17 per cent to reach 1,132 tons, as per the World Gold Council.
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