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India Festival expected to intensify demand for gold

Demand for gold is showing signs of taking off, after all.

Commenting on the scenario, George Milling-Stanley, manager of Gold Market Analysis, said in Bombay this week that the most significant development in the third quarter of 1998 was a continued increase in the demand for gold as an investment.

All over the world, investors are looking for ways to preserve their wealth, and increasingly those investors are starting to turn to gold.

This growth in investment demand has become increasingly apparent over the past several quarters, and the revival has spread to countries as diverse as Indonesia, Saudi Arabia, Vietnam, the USA and Japan.

The market is now running into what is traditionally the strongest period of the year for gold demand. The India Festival and wedding season is well underway, Christmas should provide its usual boost to demand in the western world, and buying should soon start to pick up among Chinese communities around the world ahead of the lunar new year. The outlook is for the recovery to continue over the reminder of the year, he said.

According to the World Gold Council, Indian year-to-date demand for gold was 19 per cent higher than in the first three quarters of 1997. The demand in the third quarter of 1998 after two quarters of buoyant growth was 171.8 tonnes, lower than the record level of third quarter 1997.

Derrick Machado, financial institutions manager of the WGC, said the scenario today has changed.

Liberalisation of imports and the consequent improved method of measuring demand introduced in the last quarter makes direct comparisons between 1997 and 1998 less appropriate.

While in the past import data was based on estimates of imports from Dubai, it is now collected directly from gold importing banks and official bodies.

International gold demand in the third quarter recovered from the poor start to the year, although the economic and currency crisis in Asia kept the demand below normal levels in several countries.

Total demand in the countries monitored by the WGC was 676 tonnes, just one per cent below the record third quarter of 1997.

The good third quarter statistics were the result of a steady performance by jewellery and a surge in investment, especially in the USA, where coin sales rose to near record levels.

UNI

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