China May Match India as World's Biggest Gold Consumer
Source: Bloomberg, Madelene Pearson (3/23/11)
"Demand in China almost tripled to 580 metric tons last year."
Demand in China, the world's second-biggest economy, almost tripled to 580 metric tons last year from 206 tons in 2001, data from the producer-funded World Gold Council show. Use in India may slump 5% to 26% this year from 963 tons in 2010, Morgan Stanley said in a report yesterday.
Bullion soared to a record $1,444.95 an ounce on March 7 and rallied 30% last year for a 10th annual gain as investors sought to preserve their wealth against inflation, Middle East unrest and currency debasement. Consumer prices in China climbed 4.9% in February from a year ago, exceeding the government's 4% goal for the full year.
"The level of interest in gold as an asset class is just amazing," Jeffrey Rhodes, global head of precious metals with INTL FCStone in Dubai, said in an interview. "There is potential for China to catch up to India."
Protests partly linked to record food costs erupted across North Africa and the Middle East this year, spurring conflict in Libya and toppling leaders in Tunisia and Egypt. The unrest pushed crude oil above $100 a barrel, increasing concern that global inflation would accelerate.
Purchases by China increased to 200 tons in the first two months of 2011, according to UBS AG on March 1. The nation imported more than 300 tons last year, People's Bank of China Vice Governor Yi Gang said in Beijing Feb. 26.