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Sunday, July 22nd, 2018 - Buy Gold - Bringing you trusted gold news and gold investing information since 2006

World Gold Council: Demand Has Rocketed in First Quarter 2011

Despite an increase in demand, large gold producers are warning that a major drop in the price of the yellow metal could jeopardise primary supplies.

A report released on Friday by the World Gold Council said OLD demand has rocketed in the first quarter of 2011, as a result of the increase in purchasing gold for investments during this period.

The council, an association of gold producers aiming at encouraging the use of gold, reported that the demand for gold has increased with 11%, year on year, to 981.2 tonnes. Much of this increase is accounted for by the surge in investment gold, such as coins and bars.

The purchase of gold bars and coins increased by 52%, year on year, to 366 tonnes. This translates into a virtual doubling in value, to US$16 billion.

This increase was driven by lower gold prices as seen in January, high inflation suffered in some countries, concern over economic stability in the euro zone, as well as by the tension experienced in the Middle East and North Africa.

In its report, the council noted: “We believe conditions remain such that investment demand will continue to draw strength from these factors.”

However, gold producers warned that a drop in the price of gold could jeopardise the primary supply of the metal. “Some analysts say the gold price could go to $900/oz. At $900/oz there is no industry,” said Nick Holland, CEO of Gold Fields .

The council, however, argued that “We believe that suitable conditions remain in place to ensure that investment demand will maintain its solid growth path in the coming quarters.”

Gold is currently trading at US$1,500 an ounce, after hitting a record high of US$1,577 earlier this month.

Graham Briggs, Harmony Gold CEO, predicted that gold could reach US$1,800 as early as next year due to different factors, including that of a weakening dollar


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