GOLD demand, at record-breaking levels as global economic worries will see sustained demand from key markets, India and China this year despite high prices, the WGC (World Gold Council) said on Thursday (August 18).
Global demand for the second quarter to June was 919.8 tonnes, down 17 per cent year on year from 1,107 tonnes in the same period last year as the remarkably high European investment seen earlier levelled off.
The World Gold Council, an industry body said that demand for gold was still healthy, particularly for jewellery despite the decline in demand which steadied after the heavy investment in the last 12 months in gold exchange traded funds.
The 2011 June-end quarter was the second-highest quarterly value ever at $44.5 billion (£27 bn), the Word Gold Council said.
The highest ever quarterly demand for gold was valued at $44.7 billion (£27 bn) in the three months ended last December, the council said.
WGC expects demand for gold to remain strong for the rest of the calendar year, driven by demand from India and China.
The impact of Eurozone and US debt crises, inflationary pressures and buying from global central banks will also boost investment demand for gold.
"The strength of demand in India and China, coupled with an overall drop in recycling activity this quarter demonstrates that consumers have adjusted to the current price environment," said Marcus Grubb, WGC investment managing director.
"In addition, ongoing macro-economic uncertainty, continued sovereign debt crisis and widespread inflationary pressures will result in gold demand remaining strong," Grubb said.
India and China are battling high inflation, alongside other Asian economies like Vietnam, Indonesia, South Korea and Thailand.
"High inflation has become a positive driving force for gold,” the report said.
India is world`s biggest importer and consumer of gold. It constituted over a third of global gold demand while China`s share is also expanding rapidly.
Indians bought 540 tonnes of gold in the first half of 2011, up 21 per cent from the same period last year.
"This growth is likely to continue due to increasing levels of economic prosperity and high levels of inflation," research analyst Louise Street said.
Year on year demand for gold grew 38 per cent in India in the second quarter ended June and China by 25 per cent, the report said.
Gold jumped to a record $1,814.95 (£1,100) per ounce this week after global equities markets slumped and investors were spooked after the US sovereign debt downgrade and growing concerns about the Eurozone crisis.
The precious metal whose key drivers are investment and jewellery is widely seen as a safe haven in times of economic uncertainty and high inflation.
Demand for gold is likely to increase in India in the coming weeks as key religious festivals get under way, when the metal is often bought or gifted.
Demand traditionally leaps in India during its main wedding season from October to December and also during religious festivals when India`s nearly 900 million Hindus believe it is lucky to purchase gold jewellery, coins and bars.
