The World Gold Council stated that the outlook for gold remains robust for the duration of 2011 following an 11 percent jump in demand for the metal during the first quarter. Gold jewelry demand in dollar terms jumped 34 percent to a record $24.8 billion. Gold demand by weight for just jewelry in the first quarter rose 7 percent to a provisional 557 tonnes, but investment demand jumped 26 percent to 311 tonnes.
As was the case in first quarter, the World Gold Council predicted the main drivers for gold moving forward would be: Investment efforts tied to diversifying risk given uncertain economic conditions in the U.S. and Europe, stronger jewelry demand from India and China, and central bank purchases. In the group's "Gold Demand Trends - First Quarter 2011," which was published today, global gold demand by value reached $43.7 billion, a 40 percent year on year increase, during the January through March period. The purchase of physical bars and coins surged 52 percent. India and China together acted as the main growth engines for gold demand in first quarter.
By weight, India's gold jewelry demand rose 12 percent to 206 tonnes, but China's consumer markets drove gold jewelry demand 21 percent higher to 152 tonnes. Gold jewelry demand by weight fell in numerous countries, the World Gold Council reported. The greatest decrease in gold jewelry demand came out of Japan, down 55 percent, and in Egypt, where political unrest roiled the country, gold jewelry demand dropped 39 percent. Gold jewelry demand from the Middle East overall fell 16 percent, it dropped 17 percent in the U.K. and was 11 percent lower in Italy. U.S. gold jewelry demand fell 10 percent.
Given the record price run for gold during first quarter, only two countries registered declines in the value of consumer demand for gold jewelry. Japan's consumer demand fell 44 percent while Egypt's dropped 23 percent. Gold jewelry demand by dollar value rose 40 percent in India, 51 percent in China, 5 percent in the Middle East, 31 percent in Dubai, 12 percent in the U.S. and Italy, while demand rose 4 percent in the U.K.
The World Gold Council reported that continued uncertainty over the U.S. economy and the dollar, ongoing European sovereign debt concerns, global inflationary pressures and continued tensions in the Middle East and North Africa would keep gold purchases strong. Sustained momentum in China and India for jewelry would underpin growth for the long term. The Council also expected net purchasing of gold by the official sector would continue as central banks seek means of diversifying reserves.
Gold supplies declined 4 percent year on year in first quarter to 872.2 tonnes. Mine production increased by 44 tonnes, representing a growth rate of 7 percent.
