LONDON (Commodity Online) : World Gold Council on Wednesday said big traditional gold consumers like India and China help gold demand reach 1,050.3 metric tons in the second quarter.
In a report, the WGC said this is 36 percent higher than the same quarter in 2009, mostly due to soaring investment demand.
India and China, traditionally big gold consumers, are expected to continue to provide the main thrust of demand, but European retail investors appear to be making an increasingly important contribution to investment demand, the World Gold Council said.
That's because ongoing worries about sovereign debt levels in Europe and a wobbly euro have helped drive demand, the group said
Meanwhile, support for gold prices from China is expected to rise in light of the recent government proposal to develop the Chinese domestic gold market.
This further reinforces the WGC's view that there is huge potential for gold ownership to increase among Chinese consumers, in a market with tight domestic supply, the group said.
Economic uncertainties around the world are expected to provide continued support for gold, said the council, an industry group backed by leading gold mining companies.
These concerns led investors to gobble up gold in the second quarter, the World Gold Council said. Demand for gold-backed exchange-traded funds rose 414% compared to the second quarter of 2009.
Gold prices hit a record high June 18, when the most-active contract settled at $1,258.30 an ounce in the New York Mercantile Exchange.
But the high prices for most of the second quarter hurt jewelry demand, which declined 5% compared to the same quarter a year earlier.
Second-quarter gold supplies reached 1,131 metric tons, 18% higher on-year, the World Gold Council said.
Recycled gold coming onto the market rose 35% to 496 metric tons as the rising price of the metal encouraged consumers to sell their existing holdings, the group said.
Industrial usage of gold rose 14%, mainly thanks to a 24% increase in demand for gold in the electronics sector. Gold is used in a variety of consumer electronics, including smart phones.