Gold demand likely to remain strong in 2nd half of 2011

Demand for gold, which is witnessing a surge in prices, is likely to remain strong in the second half of 2011, following high inflationary pressure and weak alternative investment sources like the equity markets and realty sector, World Gold Council (WGC) said today.

"Going forward, we expect that the third quarter will see strong performance (by gold) leading to a good fourth quarter. This is mainly as I don't see the equity market bouncing back, and realty sector struggling with high interest rates making loans costlier," WGC Managing Director (West Asia and India)
Ajay Mitra told reporters here after releasing the Gold Demand Trends report for Q2 2011.

The yellow metal's performance is also likely to do well on good kharif output expectations, better agricultural income, longer marriage and festival season in the second half of the year, he said.

About Q2 performance, Mitra said, "The second quarter of 2011 has been excellent for investments in gold around the world, especially in India. With inflation reaching record numbers and equity markets witnessing extreme volatility, investments in gold continues to prove popular as investors look to diversify their portfolios and protect wealth".

In Q2, India was the strongest growth market with total consumer demand for gold rising 38 per cent in tonnes compared to Q2 2010. In value terms, demand for gold went up 70% to Rs 53,800 crore in Q2 2011 from Rs 31,730 crore in Q2 2010. India constituted 32% of the global demand for gold in Q2 2011 which combined both jewellery and investments.