Gold Prices

August 18, 2011 by staff 

Gold PricesGold Prices, Despite a fall in gold demand in the second quarter of 2011, the price of the yellow metal is expected to rise this year, helped largely by the growing demand for jewelry in China and India, apart from its demand for safe haven investment amid worries about global economic growth.

The World Gold Council said in its recent report that global gold demand plunged 17 percent to 919.8 tons in the second quarter of 2011 compared to the exceptionally strong levels of 1,107 tons in the second quarter of 2010. However, demand in value terms, grew 5 percent year to year and from 44.5 billion and 42.6 billion during the period.

Second quarter 2011 global investment demand fell 37 percent year on year to 359.4 tons 574.2 tons.

Despite the higher gold prices, demand from India and China grew 38 percent and 25 percent respectively during the second quarter of 2011 compared to same period in 2010.

This growth is likely to continue due to rising levels of economic prosperity, high levels of inflation and the upcoming holiday buying gold key.

In addition, central banks around the world continue to be net buyers of gold. The purchase of 69.4 tons during the second quarter 2011 shows that central banks continue to turn to gold to diversify their reserves, the industry group based in London said.

Apart from the central bank demand, strong net inflows in Exchange Traded Funds could support the growth of demand. ETFs saw net inflows of nearly 51.7 tons during the second quarter of 2011, which compared well to the last 12 quarters (excluding two highs), when the average income of 41.4 tons of the ETF.

Despite an increase in mining production, supply is contracted in the second quarter of 2011 primarily due to increased net purchases of central banks, the WGC said. The supply of gold declined by 4 percent in the second quarter of 2011 to 1058.7 1108.3 tons tons in the same period of 2010 and mine production increased by 7 percent to 708.8 tons last year’s levels of 659.4 tons.

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