Golden Pig gets off to strong start for Q1 record of $17.4BN

18 May '07

3 min read

The 'Year of the Golden Pig effect' impacted strongly in China in the first quarter of 2007 providing a further boost to already robust growth in global demand for gold.

Consumer demand for gold in China was up 31% on the same quarter last year, as the Chinese flocked to buy gold jewellery and commemorative “lucky balls”, particularly around Chinese New Year in mid-February.

Figures released today by the World Gold Council (WGC) showed global demand for gold reaching $17.4bn, more than double the level of four years earlier. The figures, compiled independently for WGC by GFMS Limited, showed identifiable demand for gold in Q1 2007 was 4% higher than Q1 2006 in tonnage terms and 22% higher in dollar terms.

Demand in the world's largest gold market, India, also surged in the first quarter, rising by 50% on Q1 2006 figures. Strong economic growth and the onset of the wedding season played a role here, but, more importantly, the development provided strong evidence of consumers' comfort with gold prices above the $650 mark. Total consumer demand reached 211 tonnes, just six tonnes short of the previous first quarter peak in 2001, when gold was less than half the price it is now.

Spurred by strong economic growth in key markets and a less volatile gold price, coupled with sustained promotion, jewellery demand was 17% higher than the weak Q1 2006 in tonnage terms and 38% higher in dollar terms.

Net retail investment was 28% higher than Q1 2006 in tonnage terms and 51% higher in dollar terms. However slower growth of exchange traded funds, compared to Q1 2006, resulted in total identifiable investment falling 26% in tonnage terms and 13% in dollar terms.

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