Chinese love affair with gold beats Indian demand
Wednesday, 19 February 2014
LONDON, Feb 18 (AFP) : China overtook India as the biggest consumer of gold in the world last year, ramping up its demand by 32.0 per cent from the 2012 level, the World Gold Council reported on Tuesday.
But globally investors pulled away from the protection of gold as the risks of inflation and renewed financial crises receded. Last year demand from China for gold for jewellery, coins and bars totalled a "remarkable" new record of 1,065.8 tonnes.
That was ahead of Indian demand of 974.8 tonnes, according to the council representing leading gold producers.
Global demand for gold in jewellery last year was the highest for 16 years, but investment funds were heavy sellers and the price fell by nearly a third during the year.
The price is around $1,324.80 an ounce now.
The council also estimated that about 300 tonnes of gold have slipped through its statistics because quantities of the metal are scattered obscurely throughout the supply chain in China.
Inclusion of this missing amount would take total Chinese demand up to about 1,400 tonnes.
"China is number one for the first time," the council's managing director Marcus Grubb told AFP.
India had always been the biggest market since the 1950s and 1960s, he said.
The switch of places at the top of the ranking reflects in part a decision by the Indian government to reduce the importation of gold to help reduce a huge trade deficit.
These measures triggered a 63.0-per cent slump in demand for gold from India in the third quarter of last year, the council said, citing official India statistics.
However, for the whole of 2013, demand from India rose by 13.0 per cent from the level in 2012, partly because of heavy buying before some of the restrictions took effect in July.
Chinese demand was boosted by the rise of a middle class, by rising prosperity, by high levels of savings and by a shortage of other opportunities for investment, Grubb said.
Last year "proved to be the year of the consumer, with gold jewellery demand close to pre-crisis levels and investment in small bars and coins hitting a record high," the council said in its annual report.