Gold rush

17 February 2011 By Wayne Arnold

The yellow metal occupies a special place in the hearts of Asia’s savers. With concerns about inflation mounting, gold’s popularity is rising in India and China with official encouragement. That may confound growing suspicions that gold’s rally has run its course.

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The World Gold Council, a lobbying group for gold producers, said Feb. 17 in its annual "Gold Demand Trends" report that global demand for gold in 2011 was likely to rise further on demand from Asian consumers, particularly in China and India. Demand climbed 17 percent in 2010, it said, with the two countries accounting for 51 percent of global demand for gold jewellery and gold bullion and coins.

Imports of gold by India, the world's largest gold consumer, rose 30 percent in the fourth quarter of 2010 to 265 tonnes, according to data from the WGC. China led growth in demand for gold as an investment: Chinese bought 179.9 tonnes of gold bars and coins in 2010, roughly $7 billion worth, up 70 percent from 2009.

The Industrial and Commercial Bank of China on Feb. 15 launched its second gold investment product for retail customers, allowing them to buy gold bars. A bank executive said told Reuters that it had sold 7 tonnes of gold in January, nearly half the 15 tonnes it sold in all of 2010. China announced measures last August measures to promote and regulate the local gold market and expanded the number of banks allowed to import gold bullion.

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