European gold investment demand up 135% year on year

The World Gold Council are out with a piece of research looking at gold demand in the third quarter of 2011. Unsurprisingly demand is up some 6% on the same period from 2010. In value terms that adds up to $57.7bn in a single quarter – a record.

But it is investment demand out of Europe that shows where the real strength is. Investment demand in Europe reached an all time record or 118.1 tonnes or €4.6bn. This increase represents a staggering increase of 135% over the same period last year.

What’s really impressive is that this demand has come all whilst the gold price has rallied over 40% over the same period a year earlier. So higher prices haven’t deterred investors.

Global investment demand, while not as dramatic as Europe, was still impressive, pulling in an increase over the same period last year of 33%. In volume measures Global demand rose to 468.1 tonnes vrs 352.1 tonnes a year earlier.

It seems that investment demand is now the biggest driver in the gold market right now with Jewelry demand falling some 10% from 518.9 tonnes in 2010 to 465.6 tonnes. It now means that investment demand is now bigger than jewelry demand.

We expect this trend to continue for the next few years as people start looking at gold as money once again rather than something pretty to wear around the neck.

Central banks around the world are still out there buying up gold. In q3 of 2011 net purchases by central banks amounted to 148.4 tonnes – we sure have come along way from the days of central banks being net sellers.

Finally a quick word on supply. Supply for q3 2011 was only up 2%. Which means that demand is out pacing the supply of gold to market by some 4%. We will leave it to the imagination for our readers what this dynamic will mean for price if this trend continues.

Link to this article: : http://www.goldmadesimplenews.com/gold/european-gold-investment-demand-up-135-year-on-year-5708/

Posted by on Nov 18 2011. Filed under Analysis, Gold and Silver Media, Gold News, Markets. You can follow any responses to this entry through the RSS 2.0. You can skip to the end and leave a response. Pinging is currently not allowed.

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