Diversity of gold market keeps global demand above $100 billion

In 2009, the dollar demand for gold remained above the $100 billion mark for the second year in succession against the backdrop of continued turbulence in financial and commodity markets.

According to World Gold Council's (''WGC'') Gold Demand Trends published today, this resilience in demand was achieved in the context of average gold prices 12 per cent higher than those in 2008, at $972.35/oz.

Total identifiable gold demand in tonnage terms fell 11 per cent to 3385.8 tonnes (t) during 2009 when compared to the exceptional levels reached in 2008, masking a progressive recovery in jewellery and industrial demand after a weak first quarter and resilient investment demand during the year under review.

Compared with the extraordinary levels of fourth quarter demand recorded in 2008, the final quarter of 2009 showed a decline in total identifiable demand of 24 per cent in tonnage terms. During this period, the gold price averaged $1,099.63, up 38 per cent on the final quarter of 2008. Total identifiable demand during the final three months of $29 billion was equivalent to a 5 per cent rise in $ value terms.

The Indian market rebounded in 2009 after a very weak first quarter. Fourth quarter demand improved primarily due to the start of the wedding season, festive seasons and Diwali, totalling 180.7t, an increase of 17 per cent when compared to Q3'09 (154.4t). Fourth quarter demand was 13 per cent higher than year earlier levels of 159.6t.

Weak economic conditions and high gold prices in 2009 saw demand down 33 per cent on 2008 levels to 480.0 tonnes. India retained its position as the world's largest gold consuming nation in 2009. Jewellery demand in Q4 totalled 137.8 tonnes, an increase of 8 per cent from Q3 and up 27 per cent from the Q4 2008 result. On an annual basis, India's appetite for jewellery in 2009 totalled 405.8 tonnes, a decline of 19 per cent as against 501.6 tonnes in 2008.