Trade group reports 11% on-year growth for gold demand
By Claudia Assis and Sarah Turner, MarketWatch
SAN FRANCISCO (MarketWatch) -- Gold turned lower Thursday, but silver extended gains made in the previous session
Gold for June delivery futures GCM11 -0.38% declined $6.40, or 0.4%, to $1,489.70 an ounce on the Comex division of the New York Mercantile Exchange. It had traded as high as $1,499.60 in electronic trading.
On Wednesday, gold for June delivery jumped $15.80, or 1.1% while July silver SIN11 +0.37% gained 21 cents, or 0.6%, to $35.31 an ounce.
Gold demand rose in the first quarter by 11% year-on-year, said the World Gold Council Thursday.
China and India accounted for 63% of total demand.
“Given the huge rise of China’s demand, which surged by 32% in a year, the WGC’s earlier forecast that China’s gold demand would double in 10 years could be proven too conservative,” analysts at Commerzbank said. “Consequently, we expect the price of gold to pick up to $1,600 a troy ounce by year-end after a temporary weakness in the summer.”
Investment demand grew by 26% in the first quarter of the year, WGC said.
Analysts at MF Global said in a note to clients they expected metals to maintain a short-term rebound in Thursday’s trade, as the recovery in the previous session “signaled that the short-term correction may have run its course.”
On Wednesday, the minutes of the latest Federal Reserve interest rate meeting showed that Fed officials are divided on when to start tightening policy. Read more on Fed minutes.
“Bernanke’s press conference seemed to reduce expectations about tightening by suggesting that it would be at least two meetings until any policy tightening would take place. To us, that seemed a bit more dovish than expectations going into the meeting and seemed like reason enough to expect the quantitative ease trade to continue supporting gold prices,” the MF Global analysts said.
