Gold demand rose in 2011 – World Gold Council
LONDON, February 19, 2012 – 2011 marked another impressive year for global gold demand, with investment demand showing strong growth and both jewellery and technology sectors remaining resilient, the World Gold Council (WGC) said.
Mine production increased slightly, to a record annual level, but this was counterbalanced by a small decline in recycling and considerable net purchases by central banks.
Annual demand totalled 4,067.1 tonnes (+0.4% year-on-year) worth an estimated US$205.5 billion, the WGC said in a report entitled “Gold Demand Trends” for full year 2011.
Demand for gold bars and coins accelerated, reflecting a blend of positive influences including concern over the financial health and future viability of the euro area; high inflation in some countries; positive price expectations; and the relatively poor performance of a range of alternative investments.
Jewellery and technology demand for gold weakened slightly in 2011, although both sectors could be considered relatively robust in the context of high double-digit increases in annual average gold prices in almost all currencies of the markets monitored by the WGC.
As a new year unfolds, a number of supportive factors that underpinned gold demand during 2011 are seen generating growth over the coming quarters.
During 2012, the investment sector should continue to draw strength from, on the one hand, continued very low (and in many cases negative) real interest rates and, on the other hand, inflationary pressures, whether real or perceived.
Widespread very low or negative real interest rates provide a continued pillar of support to gold demand around the globe, particularly in the wake of the U.S. Federal Reserve’s recent statement that rates could be expected to remain “exceptionally low” through to at least late 2014.
Meanwhile, gold’s role as an inflation hedge should bolster its appeal, particularly in countries such as India, China and Vietnam that continue to be afflicted by high inflation, the WGC said.
Furthermore, the fear of future inflation gives added impetus to investment demand, notably in a number of Western markets where some investors are concerned that the widespread expansionary monetary policies of the last few years are providing fuel for latent rapid inflation growth.