Gold demand outgrows supply
Source: Bloomberg News |
May 27, 2011, Friday
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Print Edition
Print Edition
GOLD output in China, the largest producer, may reach 400 tons in the next three years as demand continues to outgrow supply in the world's largest investment market for the metal.
"China's gold industry is facing a great opportunity as gold prices will remain at historic high levels given the depreciation of the US dollar and intensifying geopolitical risks," Sun Zhaoxue, president of China National Gold Group Corp, the owner of China's largest gold mine.
The country produced 340.9 tons of the precious metal last year. Demand was about 700 tons, according to the World Gold Council.
Gold imports by China may gain after investment demand more than doubled in the first quarter, with the country overtaking India to become the largest market for gold coins and bars, the council said. Bullion jumped to a record US$1,577.57 an ounce this month as investors sought a store of value amid rising inflation and concerns about the strength of the global recovery.
"We estimate China's private sector now holds about 5,000 tons of gold and the central bank holds 1,054 tons of gold," said Wang Zhonghui, chairman of the Jingyi Group, a jewelry maker. "So there is sizable potential for China to catch up with India's level of gold holdings, which is about 15,000 tons."
The council estimates Indian households have more than 18,000 tons, the world's largest holdings.
Investment demand in China more than doubled to 90.9 tons in the first three months and consumption of gold jewelry gained 21 percent to a record 142.9 tons, the council said. Imports were more than 300 tons last year, People's Bank of China Vice Governor Yi Gang said on February 26 in Beijing. The government does not publish official statistics on gold imports.
The country's total gold demand in the first quarter jumped 47 percent from a year ago to 233.8 tons, the council said. That still lags behind Indian consumption of 291.8 tons, according to the council.
"Chinese demand remains robust, and was a partial driver of the recent surge in demand, with Shanghai Gold Exchange turnover bouncing higher as the price fell towards US$1,500 in mid-May, and remaining solid since," said Nick Moore, chief commodities strategist at RBS Global Banking and Markets, in a report on Wednesday.
"China's gold industry is facing a great opportunity as gold prices will remain at historic high levels given the depreciation of the US dollar and intensifying geopolitical risks," Sun Zhaoxue, president of China National Gold Group Corp, the owner of China's largest gold mine.
The country produced 340.9 tons of the precious metal last year. Demand was about 700 tons, according to the World Gold Council.
Gold imports by China may gain after investment demand more than doubled in the first quarter, with the country overtaking India to become the largest market for gold coins and bars, the council said. Bullion jumped to a record US$1,577.57 an ounce this month as investors sought a store of value amid rising inflation and concerns about the strength of the global recovery.
"We estimate China's private sector now holds about 5,000 tons of gold and the central bank holds 1,054 tons of gold," said Wang Zhonghui, chairman of the Jingyi Group, a jewelry maker. "So there is sizable potential for China to catch up with India's level of gold holdings, which is about 15,000 tons."
The council estimates Indian households have more than 18,000 tons, the world's largest holdings.
Investment demand in China more than doubled to 90.9 tons in the first three months and consumption of gold jewelry gained 21 percent to a record 142.9 tons, the council said. Imports were more than 300 tons last year, People's Bank of China Vice Governor Yi Gang said on February 26 in Beijing. The government does not publish official statistics on gold imports.
The country's total gold demand in the first quarter jumped 47 percent from a year ago to 233.8 tons, the council said. That still lags behind Indian consumption of 291.8 tons, according to the council.
"Chinese demand remains robust, and was a partial driver of the recent surge in demand, with Shanghai Gold Exchange turnover bouncing higher as the price fell towards US$1,500 in mid-May, and remaining solid since," said Nick Moore, chief commodities strategist at RBS Global Banking and Markets, in a report on Wednesday.
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