Gold will remain a safe haven for investors in what is one of the worst financial crises in history, despite the recent price volatility, a senior industry official said on Sunday. Gold bullion has dropped nearly 20 percent since October after a recent wave of fund selling, but still offers the diversity and value which investors will be looking for in a climate of high risk, said Rozanna Wozniak, investment research manager with industry body the World Gold Council. "Even at around $700 gold is higher than it was about two years ago," Wozniak said. "Gold has been keenly sought after, reflecting its perception as a safe haven and store of value. There is no risk of it being affected by defaults." Wozniak added that the strong buying by investors in gold as a safe haven had been offset by speculative investors taking profits. "A significant proportion of this selling has reflected gold's better performance relative to other assets," Wozniak said. "These investors bought gold as their insurance policy and, during times of significant market turmoil and large falls in asset prices, have been able to make a claim against that policy." U.S. gold futures for December delivery on Friday settled up $37.50, or 5.3 percent, to $742.50 an ounce on the COMEX division of the New York Mercantile Exchange. Spot gold closed up at $743.35 on Friday, but was still more than $168 lower than the highest trading value in October of $911.50. Jewellery sales in the United States had tapered off as consumer spending thinned due to the financial crisis, but investment in gold bullion was healthy, Wozniak said. Demand for the American Eagle one-ounce bullion was unprecedented while U.S. government sales of the American Buffalo were briefly suspended in late September as strong demand depleted inventories. Demand from emerging economies like China, India and the Middle East meant there was good potential medium- and long-term growth potential for gold, she said.. Indian demand for gold reached 215.4 tonnes in 2007, and was expected to stay healthy through early 2009 because of the wedding season. In China, demand for gold as an investment hit 38.4 tonnes in the first nine months of the this year, Sun Zhaozue, president of China National Gold Corp said during a mining conference last week. That nine-month figure is 60 percent above retail investment demand for the whole of 2007, which at 24 tonnes was a 60 percent increase on 2006. To see a graph showing the rise in Chinese investment demand, please click on http://customers.reuters.com/d/graphics/CN GLDDMD1108.jpg.

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