22 November, 2011

Gold benefited from Asian demand

Against the background of instability in financial markets, global demand for gold set a new record - for the third quarter it was more than $ 57 billion investment demand for gold, as it happens in times of acute crisis, exceeds industry, with the main buyer of gold in both cases by China.

Late last week, World Gold Council (WGC) released a study on the global production and consumption of gold in the third quarter of 2011. Demand for gold has increased over the same period the previous year by 6%, to 1053.9 m - the maximum value from the second quarter of 2010. In terms of money (due to the increase in the price of precious metals) demand volume reached a record - $ 57.7 billion, which is almost one and a half times higher than the rate a year ago. From the beginning, the demand for gold reached $ 146.5 billion, up 29% over the same period in 2010.

Demand for gold from the jewelry industry grew during the quarter by 10%, to 465.6 m. In this case the first time in the history of the largest consumer of gold jewelry industry has become China, surpassing the former leader - India. For the quarter, Chinese jewelers purchased 131 tons of gold, which is almost 13% higher than last year (116 tons). With index 125.3 m second place belongs to India.

However, investment demand for gold has exceeded demand for the jewelry industry and has reached 468.1 tons increase over the previous year was 33%. For all the time observing the investment demand was higher only in the first quarter of 2009, when the monetary stimulus (612 m) and in the second quarter of 2010 (575 m), when the first debt crisis deepened in Europe.

In previous cases, the demand rises were provided with purchase of units ETFs (ETF), now provided the largest increase in buyers of gold coins and bullion. This market segment has grown since the beginning of 2008 nearly quadrupled, reaching 390 m. According to Director of Investments "TKB BNP Paribas Investment Partners" Vladimir Tsuprova, Chinese and Indian investors because of the strict regulation of limited opportunities to purchase shares of ETF-fund , so the only way to invest in gold for them - to acquire it in the form of bullion or coins. Chinese and Indian investors buy bullion, coins and medallions mainly as a means of protection against inflation and the allocation of savings, says partner UFG Wealth Management Oksana Kuchura. At the end of September in annualized inflation rate in China was 6.1%, in India - 9.4%.

Due to continued demand for gold from Asian private investors, its price will continue to rise, according to market participants. "Because of the low liquidity of bullion buying a large horizon, while in the ETF investors go for a short period of time" - says Mr. Tsuprov. As the portfolio manager "Alliance ROSNO Asset Management" Timur Salikov, high consumption of gold Asia will be one of the main drivers of demand. It is estimated WGC, this year, investment demand for gold in China will exceed 250 tons, 500 tons still need to demand from jewelry manufacturers. As stated in an interview with Bloomberg Managing Director of the Asian division WGC Albert Chan, an increase in demand for gold in China in 2012, again more than 10%. "China should not be a significant obstacle to the next year the demand for gold reached 800 tons in the macroeconomic situation continued," - he added. In such circumstances, market participants are waiting for further price increases. Morgan Stanley analysts do not exclude the growth of gold prices in 2012 to $ 2200 per ounce. Since the beginning of 2011 the price of gold increased by 21% and on Friday was $ 1718 per ounce. In the August prices reached historic highs - $ 1920 per ounce.

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