Pinnacle Activity Ticker
China Drives Global Hunger for Gold
Pinnacle Digest writes: Private sector demand for gold has weakened in recent months. Demand from China and central banks has remained robust, which has led many to predict prices will rise above $1800 by year end. In 2011, China’s demand for investment focused gold bullion led to the sale of 250 metric tons of the metal, an increase of 40% year over year. In India, even more Gold bars were sold (288 tons worth). China has surpassed India as the largest consumer of gold recently.
Low interest rates, the worsening debt crisis in Europe and concerns about inflation are the key reasons cited for the increase in gold demand.
As a sign that the global economy continues to struggle, 2,759 tons of gold were sold globally for manufacturing purposes. This is down 0.9% year over year and represents a decline in demand for jewelry and other technology applications gold is used for. Investment demand is the main driver for higher gold prices.
Paul and his team believe the gold market will continue to fluctuate over the short-term, but feel gold will remain above 1,500 an ounce, a critical psychological support level. As we move into the 3rd and 4th quarters of 2012 an up-trend should be established, with gold easily breaching the $1,800 mark before year end.
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