Global demand for gold dips 5%

MUMBAI - Global demand for gold fell 5.0 percent in the first quarter of 2012 but demand in China hit record highs and outstripped that of megabuyer India, the World Gold Council said on Thursday.

Demand worldwide fell to 1,097.6 tonnes in the quarter ended March, worth an estimated $59.7 billion, with gold prices on average 16 percent higher than those seen in the same period last year, the council said in its latest report.

Photo: corbis

Reduced demand for gold from global central banks, jewellery and technology sectors outweighed a rise in investment demand for gold.

Yet Chinese consumption of the yellow metal hit new highs on investor concerns over inflation, rising 10 percent to a record 255.2 tonnes and outstripping rival India which saw a sharp decline, the WGC said.

Demand in India was down 29 percent from a year earlier to 207.6 tonnes, hit by a jewellers' strike, a weak rupee and government policy aimed at reducing gold imports and the country's wide current account deficit.

"China and India have seen continuing economic growth and whilst China's economy is expected to slow, it will nonetheless surpass the rates of growth in the West," said Marcus Grubb, managing director (investment) at the WGC.

In 2011, India saw a 7.0 percent decline in demand year-on-year to 933.4 tonnes, while demand from China jumped 20.0 percent to 769.8 tonnes.

Grubb said Chinese demand over 2012 is expected to outstrip that of India, traditionally the world's largest consumer and importer of gold.

The two countries, which have both been battling high inflation, account for about half of the world's gold demand combined.

Global demand surpassed $200 billion for the first time in 2011 as demand for the metal as a safe-haven investment surged, the WGC said in its annual report in February.