Gold demand expected to be strong in 2010: WGC

MUMBAI: Gold demand is expected to be strong during 2010, due to increasing interest for jewellery in India and China irrespective of high local prices, the World Gold Council today said.

"Demand in India and China will continue to grow driven by jewellery demand, in spite of high local currency gold prices," WGC's Gold Demand Trends report published today said.

It said, in Q1 2010, India was the strongest performing market as total consumer demand surged by 698 per cent to 193.5 tonnes. In China the demand proved resilient and increased 11 per cent in Q1 2010 to 105.2 tonnes.

On May 12, gold prices in India increased to Rs 56,032 an ounce, the highest level for the year, while at the same time in China prices reached an all-time high of RMB 8,480 an ounce, WGC said.

"The diversity of demand for gold, both by sector and geography ensures that the outlook for gold remains strong for the remainder of 2010. Despite increasing gold prices, consumers in China and India will continue to drive market growth, particularly in jewellery," WGC CEO Aram Shishmanian said.

He further said that the uncertain economic outlook and sovereign risk fears in the western markets will add impetus to growth in investment as investors seek to protect wealth.