Gold's Safe Haven Characteristics Fuel Heavy Buying in the Third Quarter

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The latest Gold Demand Trends publication from the World Gold Council, using figures completed by the independent research house GFMS Ltd., shows that physical demand for gold in the third quarter increased by 19% in tonnage terms over the third quarter of 2006 to reach 947 tonnes...

The latest Gold Demand Trends publication from the World Gold Council, using figures completed by the independent research house GFMS Ltd., shows that physical demand for gold in the third quarter increased by 19% in tonnage terms over the third quarter of 2006 to reach 947 tonnes and that the demand in the first three quarters of the year reached 2,668 tonnes, a 12% increase over the first three quarters of 2006, although it was down by almost 5% against the 2,800 registered in the first three quarters of 2005. The driving force in the growth in demand in the third quarter was investor interest, largely on a safe haven basis, in the face of the growing concerns over the problems in the sub prime markets and their potential ramifications on the financial sector.

Demand in the third quarter was up by 30% in dollar terms over the same period of 2006, at a record $20.7 billion. Investment demand for gold was up by 96% at 241 tonnes, or by 115% in dollar terms at $7.5 billion, with investment in the Exchange Traded Funds and similar products (included in the overall investment demand figure) reaching a record 138 tonnes...

The increase in investor interest in gold has been underway for several years , with identifiable investment increasing to 19% of total demand in 2006, from just 10% five years previously. Identifiable investment in the first nine months of this year has already surpassed the average annual investment demand of 476 tonnes per annum over the previous five years, reaching 510 tonnes. Between 2002 and 2006, identifiable investment rose from 343 tonnes to 645 tonnes per annum.

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