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                                    Gold finished strong in 2012, due to the demands from
                                    India, China and Central Banks.

                                             By: Demetrius L. Brown (PJI) 2-27-2013

According to 2013 World Gold Council report, last year gold valued was at an all time high, gold demand in 2012 was valued at $236.4bn (US). Gold demand in value terms for the final quarter of the year was 6% higher year-on-year at $66.2bn (US), this marks the highest ever Q4 performance. Global gold demand in Q4 2012 was 1,195.9 tons (t), up 4% on the same quarter in 2011. In Q4 2012, the average gold price reached a record level of $1,721.8/oz (US), up 1% on the previous record average price in Q3 2011. The average price during 2012 was $1,669.0/oz (US), up 6% from $1,571.5/oz (US) in 2011.

Let’s look at the driving factor in the spike in the demand for gold. India, China and the Central Banks are world power houses when it comes to gold. India’s market performed strongly in the final quarter with total demand at 261.9t, an increase of 41% on the same period last year. Both jewelry and investment demand reached their highest levels for six quarters. Demand for jewelry was up 35% year-on-year to reach 153.0t, and strong retail demand led to 108.9t of investment buying. Despite China’s flat year-on-year performance, due to the economic slowdown, they finished the year strong. Their Q4 total demand was up 1% on the previous quarter to 202.5t. Jewelery demand was137.0t up 1%, on Q4 2011 and investment demand was 65.5t, up 2% on the previous year. These increases may reflect the fact that the economic slowdown in China appears to have been shorter than expected. Central Bank has been a net purchaser of gold eight consecutive quarters. Central bank buying for the full year rose by 17% compared to 2011, totaling 534.6t, the highest level since 1964. Central bank purchases stood at 145.0t in Q4, up 29% on the corresponding quarter in the previous year.

Global investment in Exchange Traded Funds (ETFs) in 2012 was up significantly by 51% on the preceding year, though Q4 was down 16% to 88.1t when compared with the high levels recorded in Q3 2012. As of February 27, 2013, gold is testing at $1,600 an ounce following two week of decline.

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