Gold demand fell 11% in ’09, but investors bullish: WGC

Gold demand fell 11% in ’09, but investors bullish: WGC

New York: Global gold demand dropped 11% in 2009 on weaker industrial and jewellery demand, but investors’ appetite for the bullion is likely to remain strong this year, the World Gold Council, or WGC, said on Wednesday.

Demand for both industrial and jewellery gold showed signs of recovery late last year, WGC said in a report.

The bullion gained 35% return last year, its biggest annual gain in three decades, on worries over currencies’ depreciation and expectations of long-term inflation.

Global demand fell 24% in the last quarter of the year to 819.7 tonnes versus a year ago, but rose when compared with the previous two quarters of the year. “We are beginning to believe, as a number of people are showing through their purchases of gold, that things may be beginning to get better," said George Milling-Stanley, WGC’s managing director of government affairs. WGC is funded by the world’s leading gold mining companies.

Identifiable investment demand in 2009 rose 7% in part due to recovery in net retail investment in India and the US.

Gold demand for exchange-traded funds rose 85% in 2009 on a strong first-quarter, the report said. It has somewhat retreated in recent quarters but demand is likely to rise on increased investors’ appetite.

Gold rallied to two-week highs of about $1,120 (Rs51,000) an ounce on Tuesday as the euro recovered from recent hefty losses against the dollar and investors snapped up gold to hedge against debt default risks in Europe.

Global jewellery demand plummeted 20% in 2009 to 1,747.3 tonnes as the downturn curtailed purchases in top consumers like India.

A sharp fall in gold jewellery demand in India dragged down its overall demand by 33% to 480 tonnes in 2009. Still, India saw jewellery recover by 27% in the last quarter of the year, holding its position as the world’s top consumer of gold.

WGC said it is unclear if that optimism will persist in India given high prices.