Global gold demand in 2010 reached a 10 year high in tonnage and an all time high in value, with strong demand across all sectors, according to the World Gold Council (WGC).
"Gold demand for the year reached a ten year high with annual demand of 3,812.2 tonnes worth approximately $150 billion," it said, adding that the demand was up by nine per cent year-on-year, and marginally above the previous peak of 2008 despite a 40 per cent increase in the annual average price level between 2008 and 2010.
In value terms, total annual gold demand surged by 38 per cent to a record of $150 billion. "On November 9, 2010, the demand led to a new record gold price of $1,421/oz on the London PM fix," the World Gold Council's Gold Demand Trends (GDT) report revealed.
Similarly, the jewellery sector enjoyed a strong recovery in 2010, with annual demand for gold jewellery rising by 17 per cent from 1760.3 tonnes in 2009 to 2059.6 tonnes. The rise in annual average prices over the same period was 26 per cent. In value terms, this resulted in record annual jewellery demand of $81 billion.
Asian consumers drove jewellery demand, particularly in China and India, it said, adding that the Chinese demand is expected to continue to increase rapidly during 2011 as economic growth in China remains strong, while Indian gold jewellery demand is likely to remain resilient and grow.
Asian consumers led demand with the revival of the Indian market and strong momentum in Chinese gold demand, which together constituted 51 per cent of total jewellery and investment demand during the year.
According to the annual report, a structural shift in central bank policy towards gold meant that in 2010 central banks became net buyers of gold for the first time in 21 years, removing a significant source of supply to the market.
Similarly, investment demand was down by two per cent compared with 2009, but was the second highest year on record at 1,333 tonnes, which equated to $52 billion. Investment demand for gold as a foundation asset in portfolios is likely to remain strong, fuelled by ongoing uncertainty surrounding global economic recovery and fiscal imbalances, as well as fear of impending inflationary pressures and currency tensions, it added.
Investment demand, comprising bar and coin demand, ETFs and similar products, but excluding OTC investment demand, remained stable in 2010, down just by two per cent from the exceptional levels seen in 2009. It equated to a 23 per cent rise in value terms from $43 billion in 2009 to $52 billion in 2010.
Physical bar demand was particularly strong during the year, recording an annual gain of 56 per cent at 713.2 tonnes. "Demand for gold ETFs and similar products totalled 338 tonnes during 2010 or nine per cent of total demand, the report said, adding, "although this was 45 per cent below the 2009 peak of 617.1 tonnes, it was nevertheless the second highest annual figure on record."
As at the end of 2010, total gold holdings in ETFs and similar products stood at 2,175 tonnes with a US dollar value of $96 billion. Demand for gold used in technology was 419.6 tonnes, 12.4 per cent higher than in 2009 as the electronics segment fuelled recovery in the sector, with demand returning to long-term trend levels.
Demand soared by 41 per cent year-on-year in US dollar terms to a record $17 billion. "India was the strongest growth market in 2010. Total annual consumer demand of 963.1 tonnes registered growth of 66 per cent relative to 2009, which was largely driven by the jewellery sector. In value terms this was worth $38 billion," it added.
China was the strongest market for investment demand growth. Annual demand for small bars and coins increased by 70 per cent year-on-year, totalling 179.9 tonnes, which is worth approximately $7 billion.
Total supply is estimated to have increased marginally, two per cent higher year-on-year for the full year 2010, with a number of new projects across a range of countries and regions contributing to higher levels of mine supply. Within total supply, recycled gold, which accounts for 40 per cent, fell by one per cent compared with the previous year to 1,653 tonnes.
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