CHINA is set to overtake India as the world’s largest gold buyer this year as demand for the metal for jewellery and as a safe-haven investment surges, the World Gold Council (WGC) said today.
Global demand hit 4,067.1 tonnes in 2011 – edging up 0.4 per cent year-on-year – worth an estimated $205.5bn (£131.12bn), the first time demand has surpassed $200bn (£127.61bn), the council said in its latest annual report.
Gold prices rose to a record over $1,920 (£1225.03) an ounce in September on frenzied buying by individuals, investment funds and central banks in the aftermath of a US credit rating downgrade and plunging global equity markets.
Prices have slipped since but still hover around $1,700 (£1084.56) per ounce.
India, the largest gold consumer and importer, saw a 7.0-per cent decline in demand year-on-year to 933.4 tonnes last year, while demand from China jumped 20.0 per cent to 769.8 tonnes in the same period.
“There was a major boost to the overall demand from China, a trend we see continuing in the new year,” said Marcus Grubb, WGC’s investment managing director.
“It is likely that China will emerge as the largest gold market in the world for the first time in 2012.”
India, where gold is widely purchased for religious and ceremonial occasions, consumed less of the yellow metal in 2011 largely because of a weak rupee, which made imports of gold – priced in US dollars – more expensive.
“The domestic currency fell precipitously in the second half of 2011, on foreign capital outflows. The rapid rise and fall in the rupee and resulting local gold price swings impacted gold buying,” the report said.
India’s gold demand was down 27.0 per cent year-on-year in the second half of 2011.
The WGC said it expects global demand for gold to remain strong in 2012.
