Arab Today, arab today gold industry upbeat despite consumer slump
Last Updated : GMT 03:09:07
Arab Today, arab today
Arab Today, arab today

Gold industry upbeat despite consumer slump

Arab Today, arab today

Arab Today, arab today Gold industry upbeat despite consumer slump

London - AFP

Global economic uncertainty will fuel the current surge in investment demand for gold, even as record prices force a slump in the jewellery market, the World Gold Council (WGC) said Thursday. Global demand for gold was 1,054 tonnes in the three months to September, up 6.0 percent year-on-year -- equal to a record high of $57.7 billion in value terms, the WGC said in a report. The increase was driven by a 33 percent rise in investment demand, with gold offering a safe haven after a US sovereign debt downgrade, plunging global equity markets and the escalating eurozone crisis. The investment surge offset a 10 percent drop in jewellery demand during the quarter as gold prices hit a record $1,920 per ounce in September. "Investors across the globe sought to protect their wealth, diversify their risk and benefit from gold's strong returns," the WGC said in a report. "Given gold's proven risk mitigation properties, it is likely that investors will continue to seek protection from economic uncertainty, which shows no signs of abating," Marcus Grubb, WGC's investment managing director said. "Gold's long-term fundamentals remain strong with a diverse and growing demand base, coupled with constrained supply-side activity," Grubb added. The yellow metal, whose key drivers are investment and jewellery, is widely seen as a safe haven for cash in times of uncertain economic conditions and high inflation. September's record price followed frenzied buying by investors, large funds and central banks around the world. But the high costs and near double-digit inflation saw demand in India -- the world's largest gold consumer and importer -- fall 23 percent to 203.3 tonnes in the quarter to September, from 263.9 tonnes a year earlier. "Consumer confidence has been knocked by high domestic inflation, of near 10 percent," WGC analysts Louise Street and Johan Palmberg, said in the report. "This adversely affected jewellery demand, impacted disposable income levels and overall consumer sentiment." High and volatile prices during India's festive season, which peaks with the Hindu festival of Diwali in October, deterred customers, they added. China, where there is rising demand among an ever richer middle class for luxury goods, dominated growth in the quarter, with a 17 percent increase to 200.7 tonnes. Other Asian economies such as Vietnam, Hong Kong and Taiwan also posted strong growth. The council expects India's demand for gold to increase during its main wedding season, which runs from December to January. India's successful monsoon this year is also likely to yield good crops and boost rural income, while easing high food inflation, the report said. "We look forward to periods of increased price stability which will result in Indian consumers being able to build gold purchases into their household budgets," said Ajay Mitra, WGC's managing director for Middle East and India.

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Arab Today, arab today gold industry upbeat despite consumer slump Arab Today, arab today gold industry upbeat despite consumer slump

 



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