WGC Sees Gold Demand Recovering in 2010


"I would expect to see a plus sign at the end of the year."

Global gold demand is expected to rise in 2010 after last year's fall with economic recovery driving jewelry demand and fueling investor appetite for bullion, a senior official at the World Gold Council said.

"I would expect to see a plus sign at the end of the year," Rozanna Wozniak, investment research manager at the industry-funded WGC, told Reuters on the sidelines of a presentation on Thursday.

Global gold demand fell 11% in 2009, hammered by a 20% drop in jewelry demand, which accounted for 52% of the overall demand last year. Identifiable investment demand rose 7% in 2009.

Jewelry and industrial demand would be supported by the signs of economic recovery, while uncertainties about its pace, inflation and currency risks would bolster investment demand this year, Wozniak said.

"We've got this situation when we've got improving economic conditions but an ongoing economic uncertainty. . .Investment (demand) will be supported by the uncertainty," she said.

Jewelry demand, which started picking up at the end of last year, is seen gathering strength this year as consumer demand recovers, especially in core markets such as India and the Middle East, Wozniak said.

WGC expects central banks—many of which were sellers of gold in the 1990s—to continue buying the metal as a monetary asset and a means to diversify reserves amid currency uncertainties, Wozniak said.

European central banks have been reducing gold sales while non-European central banks are likely to be present on the buy side this year.

China could be among gold buyers this year because the share of gold in its reserves remains small and is likely to turn to its domestic gold supplies to diversify reserves, Wozniak said.

"They (China) have been buying gold locally, and I would expect them to continue to have that preference," Wozniak said.

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