2010 was a significant year for gold not only in the official
sector, that of central banks, but also in the private sector of
consumers or retail investors. As regards central banks, in spite of
their second five-year gold sales agreement, they did not sell any gold
last year other than to their domestic mints. Instead, they started to
become eager buyers of gold, among others, Russia, Philippines, Sri
Lanka and Thailand adding further to their holdings, without speaking
about the greatest buyer, China.
Given their buying by the ton, central banks, in general, determined an unprecedented increase in the gold price. If during 2004-2009, the average gold price was about $717, all over 2010, gold rates had been above $1,000, reaching even about $1,500. This price was mainly the result of the buyer conduct of central banks and of the fact no large quantities of gold were expected to be sold into the open market, IMF itself finishing to sell its planned 400 tons of gold bullion. And, anyway, banks' acquisitions actually outpaced any potential sale. Russia for one bought 18.66 tons in October, while IMF sold 19.5 tons in the same month.
On the other hand, in spite of the soaring gold prices, the gold demand on part of consumers continued to grow, especially in China, India, Turkey and Russia, the most significant markets for gold jewelry, actually accounting for 63% of global demand. At the same time, retail investment increased by 25% against the previous year, especially in bar hoarding, which increased alone by 44% by comparison with the previous year. The industrial demand also increased by 13% from the previous year, mainly due to the demand from the electronics industry that uses gold components for its state-of-the-arts products.
The steady economic growth of the two main emerging economies - China and India - played the most important role in the increasing demand for gold, both citizens and central banks there buying gold eagerly. China's national demand increased by 11.4% in comparison with the previous year, and it seems that overall China has even overtaken India as the most important gold consumer worldwide.
On the other hand, the worries about failing currencies in the developed economies also contributed to the demand for gold, people opting for diversifying their portfolios with gold as a hedge against the collapse of bank-paper assets. It seems that gold took advantage of the global financial crisis, a fact reflected both in demand and international rates. Perceived as the only safe asset left in case the global bank system doesn't recover, gold may be expected to hit as high as 3,000 - 10,000 dollars an ounce; therefore, not only it had a great year, but it also has great prospects.
Given their buying by the ton, central banks, in general, determined an unprecedented increase in the gold price. If during 2004-2009, the average gold price was about $717, all over 2010, gold rates had been above $1,000, reaching even about $1,500. This price was mainly the result of the buyer conduct of central banks and of the fact no large quantities of gold were expected to be sold into the open market, IMF itself finishing to sell its planned 400 tons of gold bullion. And, anyway, banks' acquisitions actually outpaced any potential sale. Russia for one bought 18.66 tons in October, while IMF sold 19.5 tons in the same month.
On the other hand, in spite of the soaring gold prices, the gold demand on part of consumers continued to grow, especially in China, India, Turkey and Russia, the most significant markets for gold jewelry, actually accounting for 63% of global demand. At the same time, retail investment increased by 25% against the previous year, especially in bar hoarding, which increased alone by 44% by comparison with the previous year. The industrial demand also increased by 13% from the previous year, mainly due to the demand from the electronics industry that uses gold components for its state-of-the-arts products.
The steady economic growth of the two main emerging economies - China and India - played the most important role in the increasing demand for gold, both citizens and central banks there buying gold eagerly. China's national demand increased by 11.4% in comparison with the previous year, and it seems that overall China has even overtaken India as the most important gold consumer worldwide.
On the other hand, the worries about failing currencies in the developed economies also contributed to the demand for gold, people opting for diversifying their portfolios with gold as a hedge against the collapse of bank-paper assets. It seems that gold took advantage of the global financial crisis, a fact reflected both in demand and international rates. Perceived as the only safe asset left in case the global bank system doesn't recover, gold may be expected to hit as high as 3,000 - 10,000 dollars an ounce; therefore, not only it had a great year, but it also has great prospects.
