(BN) Gold Demand Jumped 36% in Second Quarter on ETFs, Industry Says

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Gold Demand Jumped 36% in Second Quarter on ETFs, Industry Says
2010-08-25 05:00:00.0 GMT

By Pham-Duy Nguyen
    Aug. 25 (Bloomberg) — Gold demand rose 36 percent in the
second quarter as investors boosted purchases of bullion-backed
funds and sent prices surging during Europe’s sovereign-debt
crisis, the producer-funded World Gold Council said.
    Global demand rose to 1,050.3 metric tons from 769.6 tons a
year earlier, the London-based industry group said today in a
report. Investors purchased 291.3 metric tons of gold in
exchange-traded funds, or ETFs, the second-highest quarter on
record, and central banks were net buyers for a fifth straight
period.
    Gold traded in New York averaged $1,198.05 an ounce during
the quarter, up 30 percent from a year earlier, as Europe’s
fiscal woes spurred investors to buy gold as a haven. The metal
surged to a record $1,266.50 on June 21 and reached the highest
ever in euros, sterling and Swiss francs.
    “We see a fresh incentive in terms of investment demand
with ongoing uncertainty over debt levels, the lack of
confidence in financial markets and the economic recovery still
weak,” said Eily Ong, a research manager at the council in
London.
    Gold prices have rallied 13 percent this year in New York,
heading for the 10th straight annual gain.
    Investment demand, including bars and coins, more than
doubled to 534.4 tons from 245.4 tons, the council said. Jewelry
demand fell 5.1 percent to 408.7 tons, and total demand from
India, the biggest buyers of the metal, was little changed from
a year earlier at 164.5 metric tons.

                       Safe-Haven Buying

    Quarterly investment in gold ETFs surged as European policy
makers pledged $1 trillion to rescue the region’s economy. ETFs
attracted 465.1 tons of investment in the first quarter of 2009,
the most ever, after the Federal Reserve slashed the main U.S.
interest rate to between zero and 0.25 percent to stimulate the
economy and Congress passed the Troubled Asset Relief Program to
bail out banks.
    Gold supply rose almost 18 percent to 1,131.6 tons from 963
tons, the council said. Central banks purchased 7.7 metric tons
during the quarter and producers bought back 15 tons.
    Gold futures for December delivery rose $4.90, or 0.4
percent, to close at $1,233.40 an ounce yesterday on the Comex
in New York. Gold for immediate delivery in London rose $4.40,
or 0.4 percent, to $1,230.55 an ounce as of 10 p.m. yesterday.

–Editors: Steve Stroth, Daniel Enoch.

For Related News and Information:
Mining industry NI MNG
Gold, jewelry TNI GLD JEWELRY
Gold supply, demand data: GFMS
Metals, mining information: MINE

To contact the reporter on this story:
Pham-Duy Nguyen in Seattle at +1-206-521-2741 or
pnguyen@bloomberg.net.

To contact the editor responsible for this story:
Steve Stroth at +1-312-692-3738 or
sstroth@bloomberg.net.


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