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Last Updated:[03-09-2013 00:53:05 EDT] Zoom in Zoom out Back to Tradenews

International Demand for Gold at a Four-year-low

tradenews Looks like Gold has lost its legendary shine, atleast that’s what global market statistics for the second quarter of 2013 will have you believe. The World Gold Council (WGC) reports that the demand for gold surged up in countries like India and China, rendering the metal cheaper, yet could not stop the global demand for this shiny metal plummeting down 12% to 856.3 tonnes from a comparable demand of about 974.3 tonnes a year before. Looks like the primary reason for this descent is the fact that global investors have quit trading in bullion funds and banks across economies have reduced their gross purchases of gold. The WGC is hopeful that this situation will change.

The global price of gold is steadily declining too- hitting a tentative 1,180.71 USD/ounce this June. As economies provide its investors more tangible and safer ecosystems for investment, the logic behind viewing gold as a safe investment medium has lost its once dominant popularity. The result, a steep drop of about 400 tonne gold backed investment funds this quarter- a direct result of the continually sliding gold prices earlier this year. WGC also notes that the demand for gold fell 23% in April-June to just $39 billion globally, as a result of this slump. The central banks of the world too eased on gold purchases to the tune of 57%, dropping to 71.1 tonnes.

Meanwhile, the Asian powers India and China accounted for about 60% of the global demand for gold in terms of jewellery. India and China have always been at the forefront as the world’s premier gold consuming nations, and the second quarter analytics goes a step further to prove this. India, traditionally the world’s largest buyer of gold, registered a jump in demand to the tune of 71% to close strongly at 310 tonnes, while China’s gold demand jumped up 87% to close at 257.5 tonnes. WGC estimates that this trend will likely continue into the next quarter. In India, gold still rules the roost; an important part of any religious festival or wedding celebrations, gold is the second biggest contributor to India’s current account deficit after oil. The Indian government understands the power of gold to its economy- raising gold import duties three times this year to help stabilise a sharply depreciating rupee.

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