Gold Demand in Asia Continues to Expand

SINGAPORE (Oct 19)  Gold demand across Asia will keep expanding as inflation spurs investment purchases, said HSBC, estimating that the region’s share of worldwide consumption jumped in the past decade.

Demand for jewelry, bars and coins in India, Greater China, Indonesia and Vietnam increased to about 60 percent of the global total compared with 35 percent in 2004, economists including Frederic Neumann wrote in a note today, citing data from the World Gold Council.

While gold is heading for its first annual loss since 2000 as the US economy recovers and the Federal Reserve weighs tapering stimulus, the slump spurred increased demand among coin and jewelry buyers across Asia.

Since 2008, demand for the precious metal in India more than doubled, while consumption in China rose almost 350 percent, Neumann said.

“With inflation still elevated in many markets and interest rates not offering adequate compensation, expect Asia’s voracious appetite for gold to persist,” Neumann wrote. “Asia is going for gold. Over recent years, demand has soared.”

Gold for immediate delivery traded at $1,318.60 an ounce, down 31 percent from the record in 2011.

Prices, which have lost 21 percent this year, will drop in each of the next four quarters and reach a four-year low as reduced stimulus in response to faster growth curbs haven demand, the 10 most-accurate forecasters tracked by Bloomberg said.