Global Gold Demand in 2010 Reached a 10 Year High in Tonnage and All Time High in Value

LONDON, February 17, 2011 /PRNewswire/ -- 2010 was an outstanding year for gold, with strong demand across all sectors, the World Gold Council said today. Gold demand for the year reached a ten year high with annual demand of 3,812.2 tonnes worth approximately US$150 billion. On 9 November 2010, this demand led to a new record gold price of US$1,421.0/oz on the London PM fix.

The Gold Demand Trends report sets out the key factors that drove gold demand in 2010, together with an outlook for 2011:

 - The jewellery sector enjoyed a strong recovery in 2010,  with annual
 demand 17% higher than in 2009. Asian consumers drove jewellery demand, 
 particularly in China and India. Chinese demand is expected to continue 
 to increase rapidly during 2011 as economic growth in China remains 
 strong,  while Indian gold jewellery demand is likely to remain resilient 
 and grow.
 - Asian consumers led demand with the revival of the Indian market and
 strong momentum in Chinese gold demand,  which together constituted 51% of
 total jewellery and investment demand during the year.
 - A structural shift in central bank policy towards gold meant that in
 2010 central banks became net buyers of gold for the first time in 21 
 years,  removing a significant source of supply to the market.
 - Investment demand was down 2% compared with 2009,  but was the second
 highest year on record at 1,333 tonnes,  which equated to US$52 billion.
 Investment demand for gold as a foundation asset in portfolios is likely 
 to remain strong,  fuelled by ongoing uncertainty surrounding global 
 economic recovery and fiscal imbalances,  as well as fear of impending 
 inflationary pressures and currency tensions.

Marcus Grubb, Managing Director, Investment at the World Gold Council commented:

"As anticipated, 2010 was a great year for gold with demand strong across all sectors. The opening weeks of this year have been characterised by an East/West divide. The dip in the gold price in January resulted in a reduction of ETF tonnage and a decline in the net speculative long position on COMEX. This has been counterbalanced by very substantial physical demand flows in Asian markets."

The shift in central bank activity was the result of two distinct market forces. 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. Today´s Gold Demand Trends report examines the impact of this development on the gold market in more detail.

George Milling-Stanley, Managing Director, Government Affairs at the World Gold Council commented:

"Emerging country banks are likely to continue purchasing gold as a means of preserving national wealth and promoting greater financial market stability. Any gold sales from advanced economies are unlikely to be significant as the official sector remains highly risk-averse. Collectively, the official sector is still a significant holder of gold. Central banks remain committed to its importance and relevance in maintaining stability and confidence as they have been for hundreds of years."

Gold Demand Statistics for full year 2010

 - Gold demand in 2010 reached a 10 year high of 3,812.2 tonnes. Demand
 was up 9% year-on-year,  and marginally above the previous peak of 2008
 despite a 40% increase in the annual average price level between 2008 and
 2010. In value terms,  total annual gold demand surged 38% to a record of
 US$150 billion.
 - Jewellery demand was remarkably robust in the face of record prices in
 the majority of currencies. Annual demand for gold jewellery rose 17% 
 from 1760.3 tonnes in 2009 to 2059.6 tonnes. The rise in annual average 
 prices over the same period was 26%. In value terms,  this resulted in 
 record annual jewellery demand of US$81 billion.
 - Investment demand,  comprising bar and coin demand,  ETFs and similar
 products,  but excluding OTC investment demand,  remained stable in 2010,  
 down just 2% from the exceptional levels seen in 2009. This equated to a 
 23% rise in value terms from US$43 billion in 2009 to US$52 billion in 
 2010. Physical bar demand was particularly strong during the year,  
 recording an annual gain of 56% at 713.2 tonnes.
 - Demand for gold ETFs and similar products totalled 338.0 tonnes during
 2010 or 9% of total demand. Although this was 45% below the 2009 peak of
 617.1 tonnes,  it was nevertheless the second highest annual figure on 
 record. As at the end of 2010,  total gold holdings in ETFs and similar 
 products stood at 2,175 tonnes with a US$ value of $96 billion.
 - Demand for gold used in technology was 419.6 tonnes,  12.4% higher than
 in 2009 as the electronics segment fuelled recovery in the sector,  with
 demand returning to long-term trend levels. Demand soared by 41% year-on-
 year in US$ terms to a record US$17 billion.
 - India was the strongest growth market in 2010. Total annual consumer
 demand of 963.1 tonnes registered growth of 66% relative to 2009,  which 
 was largely driven by the jewellery sector. In value terms this was worth 
 US$38 billion.
 - China was the strongest market for investment demand growth. Annual
 demand for small bars and coins increased by 70% year-on-year,  totalling
 179.9 tonnes,  which is worth approximately US$7 billion.
 - Total supply is estimated to have increased marginally,  2% higher
 year-on-year for the full year 2010,  with a number of new projects across 
 a range of countries and regions contributing to higher levels of mine 
 supply. Within total supply,  recycled gold,  which accounts for 40%,  fell 
 1% compared with the previous year to 1,653 tonnes.

The full year 2010 Gold Demand Trends report, which includes comprehensive data, can be viewed at: http://www.gold.org/media/

(Source: http://www.wallstreet-online.de/nachricht/3102827-global-gold-demand-in-2010-reached-a-10-year-high-in-tonnage-and-all-time-high-in-value)