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August 15, 2013

How does increased prosperity in Asia influence gold market price corrections?

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''Gold demand for jewelry fabrication in the second quarter surged to its highest level in five years as a sharp drop in the price of gold was 'met with a very positive reception across the globe,' the World Gold Council said Thursday.

Gold jewelry demand by volume increased 37 percent to 575.5 tons, according to the WGC's Gold Demand Trend report for the second quarter of 2013.  The demand for gold jewelry was so great that it far outweighed the decline in the average gold price as the demand in terms of value rose 20 percent to nearly $26.2 billion, the fourth highest on record.

The price of gold for the second quarter fell by more than $400 an ounce (a 12 percent drop), according to the WGC, the marketing development organization for the gold industry.

'Although jewelry demand is influenced by a wide set of factors, including economic growth, consumer sentiment and disposable income, to name a few, all were eclipsed by the effect of the drop in the gold price,' the WGC said in its report.  'The resultant buying frenzy caused a huge rise in regional premiums on gold, as supply chain bottlenecks caused delays in meeting demand.'

The upward trend was 'almost universal,' the WGC said, with the most notable year-over-year improvements in India, China, the Middle East and smaller Asian countries.  Demand included an increase of higher-karat gold jewelry.  Europe was the only region where jewelry demand failed to rise.''

*This information is solely an excerpt of a third-party publication and is incomplete. Please subscribe to the referenced publication for the full article. This is not an offer to buy or sell precious metals. Investors should obtain advice based on their own individual circumstances and understand the risk before making any investment decision.

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