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RAPAPORT... Global gold demand reached a record of $236.4 billion in 2012, up 2 percent year on year, according to the World Gold Council. The fourth quarter experienced the strongest performance as demand rose 6 percent to $66.2 billion, which was also a record high for the quarter. The average price of gold during 2012 was $1,669 per ounce, up 6 percent from 2011. Gold jewelry demand fell 3 percent year on year by weight, according to the group; however, the value of gold improved 4 percent to $102.6 billion. Gold demand by weight from India actually dropped 12 percent in 2012. But the World Gold Council observed a 41 percent increase in the final quarter of the year in part due to a surge in jewelry demand, which was up 35 percent, constituting the highest level to be achieved in six quarters. The prospect of duty increases, which became effective in January 2013, likely boosted gold buying in the fourth quarter, according to the trade group.  In China, gold demand by weight was flat in 2012, but jewelry demand inched up by 1 percent in the fourth quarter.
By value, gold jewelry demand in India fell 3 percent to $29.7 billion, but it rose 6 percent for Greater China to $29.3 billion. Gold jewelry demand in Indonesia rose 9 percent to $1.7 billion and it was up 3 percent to $7.9 billion in the Middle East. Turkey's gold jewelry demand jumped 7 percent to $3.7 billion, while Russia's demand surged 12 percent to $4.4 billion. Jewelry demand dropped 2 percent in the U.S. to $5.8 billion and fell 7 percent in Europe to $2.4 billion.
Global investment in exchange-traded funds (ETFs) surged 51 percent in 2012, but growth softened in the fourth quarter. Marcus Grubb, the managing director for the World Gold Council, said, “China and India remain the world’s gold power houses and by some distance, despite challenging domestic economic conditions. In India, consumer sentiment toward gold remained strong despite measures aimed at curbing demand, reaffirming gold’s role in Indian society. In an underdeveloped financial system in India, gold has an important role to play. “Notwithstanding the predicted economic slowdown in China, investment demand was up 24 percent in fourth quarter on the previous quarter and jewelry consumption held steady at 137 tons. Central banks’ move from net sellers of gold, to net buyers that we have seen in recent years, has continued apace. The official sector purchases across the world are now at their highest level for almost half a century.''
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