Gold demand declines while price soars

gold-bars1Second quarter global gold demand was down 17% year on year and down 5% on the previous quarter, according to the World Gold Council. But because the gold price has increased so much in the past two years, the value of this demand was the second highest on record at $44.5bn. The gold price ended the quarter at nearly $1,550 an ounce, up nearly 40% compared with its value at the beginning of March 2010. The price has since soared to nearly $1,800 an ounce. Jewellery accounted for about half of global demand in the second quarter, while investment demand accounted for about 40% and the rest was taken up by technology. Most investment demand is for gold bars and coins, but a significant proportion is from exchange-traded funds (ETFs). Gold demand from ETFs was higher than average in the quarter at 52 tonnes, though far below the “remarkably strong” level of 292 tonnes seen in Q2 2010. The mismatch between the apparent decline in demand for the metal and its soaring price may worry investors who fear gold in a bubble. The World Gold Council was not immediately available to comment on this. ©2011 funds europe

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