Global Gold Demand +21% to $55B in 4Q

Global demand for gold rose 21 percent year on year to $55.19 billion in the fourth quarter of 2011 as investor appetite spurred demand for the yellow metal, according to the World Gold Council (WGC). Gold demand by volume fell 2 percent to 1,017 tonnes during the quarter.

The WGC’s quarterly ”Gold Demand Trends” report noted that gold jewelry demand increased 5 percent to a record $25.86 billion, but demand by volume declined 15 percent to 476.5 tonnes.

The report explained that demand in India tailed-off sharply during the fourth quarter, falling 31 percent to $5.59 billion as quantities slumped 44 percent to 103 tonnes. WGC explained that a weaker than normal Diwali season and strong dollar restrained buying in rupee, while gold price volatility also impacted India’s jewelry demand.

The group noted that the combination of high and volatile prices increasingly led consumers to demand lighter weight gold jewelry and forced the trade to react with jewelry items at lower price points. Anecdotal reports from the trade suggested that only necessary basic purchases were being made, with consumers largely holding onto their cash as they waited for more opportune buying conditions, the report observed.

Chinese gold jewelry demand rose 26 percent to $7.13 billion during the quarter as it surpassed India to be the largest consumer of gold jewelry during the period. The volume of China’s demand increased by 2 percent to 131.4 tonnes. WGC explained that demand in China was subdued due to price volatility until late in December when it was reinvigorated by lower prices and as the trade started building inventory for the Chinese New Year.

Fourth quarter gold investment demand rose 46 percent to $23.24 billion while by volume, it grew 19 percent to 428.2 tonnes. Demand for gold used in technology products increased 19 percent to $6.09 billion, but fell 3 percent when measure in volume to 112.3 tonnes.

For the full year 2011, total global demand for gold rose 29 percent to $205.49 billion while by volume, demand was flat at 4,067.1 tonnes. Jewelry demand grew 25 percent to $99.18 billion but fell 3 percent to 1,962.9 tonnes. Gold investment demand jumped 34 percent to $61.71 billion and rose 5 percent to 1,640.7 tonnes during the year.

India ranked as the largest market for gold jewelry for the full year, followed by China, the U.S., Russia and Turkey respectively.

Total supply for the year fell 4 percent to 3,994 tonnes as mining production rose 9 percent to a record 2,821.7 tonnes while the supply of recycled gold declined 2 percent to 1,611.9 tonnes.

WGC noted that 2011 was a year in which the decade-long gold bull market was tested as prices were up by 30 percent for the year in September but softened as the year came to a close to just a high single-digit gain.

WGC characterized the year by dichotomous trends, manifest in price stability during the first half followed by higher than average volatility during the second half.

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