Gold demand up 6% during April-June: WGC

The fall in the rate of inflation reduced the prices of basic household goods, a major factor that had diverted spending away from gold in the previous year, WGC said.

The global demand for the yellow metal increased 16 per cent to 810 tonnes during the second quarter of 1999 compared to the year-ago period, a record for the second quarter and a new all time high for any three-month period, the council said.

WGC attributed the strong demand pick-up to a 32 per cent increase in investment over the same period last year and to a 13 per cent increase in jewellery demand worldwide.

Broader appreciation worldwide for the role of gold as a monetary asset brought strong gains in the demand for the yellow metal as an investment in countries like the US, Japan, Brazil, Indonesia, Thailand and Vietnam, WGC said.

"The increased demand witnessed in some Asian countries badly hit by the recent economic and currency crisis only validate people’s faith in gold," WGC financial institution manager Derrick Machado said in a statement.

He said the worldwide increase in demand for gold as an investment reaffirmed the fact that gold was still valued as an asset that assured safety and security in adverse times.

Machado claimed that the actual gold imports into India during the month of June was only 57 tonnes and not 80 tonnes as was reported in certain sections of the press.

The council, however, made no reference to the impact of sale of 27.5 tonnes of gold by the Bank of England last month on worldwide demand.

A major highlight in the second quarter gold demand trend was the more than 90 per cent increase in demand for yellow metal over the pre-crisis levels in the South-East Asian region.

Gold demand in China, however, witnessed a slump of seven per cent during the period on account of the country’s economic problems and waning consumer confidence, WGC, an industry-backed promotional organisation said.