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Global identifiable gold demand by volume exceeded 3,812t in 2010, totaling a 10-year high of US$150bn and jumping 9% over the previous year, the World Gold Council (WGC) said in its Gold Demand Trends report.
Gold saw strong demand from all sectors last year, although mainly from Asian consumers, with the revival of the Indian market and strong momentum in Chinese demand, according to the council. The two countries represented 51% of global jewelry and investment demand in 2010.
The jewelry sector experienced strong recovery in 2010, with demand growing 17% over the previous year. Consumption from the sector is also expected to climb rapidly in 2011 as economic growth in China remains strong, while Indian jewelry demand is likely to remain resilient and grow, according to the WGC.
Despite registering a 2% fall in 2010, investment demand stood at its second all-time high at 1,333t, equivalent to US$52bn. "Investment demand for gold as a foundation asset in portfolios is likely to remain strong. It will be fuelled by ongoing uncertainty surrounding global economic recovery and fiscal imbalances, as well as fear of impending inflationary pressures and currency tensions," the WGC said.
Last year saw a structural shift in central bank policy when these banks became net buyers of gold for the first time in 21 years, removing a significant source of supply to the market.
The shift in central bank activity was the result of two distinct market forces, according to managing director Marcus Grubb.
"Emerging market economies, experiencing rapid growth, have been large buyers of gold to diversify their external reserves. Meanwhile, European central banks have virtually stopped sales in the wake of the financial and European sovereign debt crises," Grubb said.
Total gold supply was 2% higher in 2010 compared with the previous year, with a number of new projects across a range of countries and regions contributing to higher levels of mine supply.
Recycled gold, which accounts for 40% of total supply, fell 1% to 1,653t.
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