Gold Demand in Q1 Five Year Low- Vietnam Becomes Largest Retail Investor

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Vietnam came into the spotlight in this quarter with investment demand more than doubling to 32 tonnes, making it the largest investment market during the quarter.

The most recent quarterly survey "Gold Demand Trends" from the World Gold Council, using figures compiled by independent research house GFMS Ltd. estimates that the dollar value of contained gold demand in the first quarter of this year (including activity in Exchange Traded Funds) reached $20.9 billion, 20% higher than in the first quarter of 2007. In tonnage terms however, offtake was down by 16% when compared with Q1 2006, at 701 tonnes. The supply-demand analysis suggests that the market was in a technical surplus of 139 tonnes, with total supply running at 857 tonnes (compare 811 tonnes in the first quarter of 2006) against fabrication in identified investment at 718 tonnes (compare 849 tonnes in Q1 2006). Jewellery demand was down by 21% year-on-year at 445 tonnes, the lowest quarterly level on record since 1992, although in dollar terms this equated to a rise of 12%, reaching $13.2 billion...

New investment in Exchange Traded Funds and similar products was lively in the first quarter; doubling against Q1 2006 to 73 tonnes in response to the financial crisis and other economic concerns [does the subsequent reversal of these gains suggest a return of confidence? Doubtful], while the associated action in the price had the reverse effect on retail investment, which dropped by 35% to 73 tonnes. The impact on overall identifiable investment was thus broadly neutral in tonnage terms, but the texture of the activity was different. In dollar terms, the amount of metal absorbed in the identifiable investment sector rose by 41% to $4.3 billion.

Vietnam came into the spotlight in this quarter with investment demand more than doubling to 32 tonnes, making it the largest investment market during the quarter. Net disinvestment from retail holders in Japan, however, was 37 tonnes. Vietnam's arrival into pole position in the retail investment sector ousts India from the top slot, a position that it has held since the second quarter of 2003.

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