golden year for precious metal

Demand for gold in value terms hit both an annual and final quarter record in 2012, while its average price during 2012 was 6% above its 2011 price.

golden year for precious metal

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Gold demand reached $236.4bn by December 2012, while the Q4 total was valued at $66.2bn, data produced by the World Gold Council shows.

Demand was driven by central bank buying, up 17% on 2011 figures, which reached its highest annual level since 1964 at $534.6trn.Totals for the final quarter were also up significantly on the previous year’s total, standing at $145.0trn, 29% above Q4 2011. Previously net sellers of the precious metal, the sector has been transitioning into a net buyer role over the past few years.

Despite a 12% decline in annual demand in India, totals for Q4 were 41% higher than at the same time last year. Jewellery demand in the region, however, reached a six-quarter high, and strong retail demand led to $108.9trn of investment buying.

The economic slowdown in China had an impact in that country, however, with figures staying in line with those seen in 2011. Q4 figures do show a 1% increase on the same time last year though, and investment demand increased by 2%.

Global investment in gold ETFs, meanwhile, was up 51% year-on-year despite a 16% drop in the final quarter compared with Q3.

Marcus Grubb, managing director, investment at the World Gold Council, said: “China and India remain the world’s gold power houses, and by some distance, despite challenging domestic economic conditions. In India, consumer sentiment towards gold remained strong despite measures aimed at curbing demand, reaffirming gold’s role in Indian society. In an underdeveloped financial system in India, gold has an important role to play.

“Despite the turbulent macroeconomic climate throughout the year, as well as the regional uncertainties affecting India and China, the two largest gold markets, annual demand was 30% higher than the average for the past decade.”

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