China Shows Increased Gold Demand

Chinas gold demand increased in the first quarter by 20%, reaching 294,3 metric tons according to a report by the World Gold Council. Global demand fell 13% to 963 tons compared to Q1 2012 and gold slipped into a bear market after its biggest drop on April 15 as inflation failed to accelerate and investors lost faith in the metal as a store of value.

Equities climbed and continue advancing amid optimism that the United States economy is recovering and will lead the global economy to a better state. Europes negative economic data, which was published yesterday, further weakened the Euro, thus strengthening the dollar and devaluing gold, which dropped below the $1 400 mark.

Meanwhile purchases of bars and coins in China grew at a faster pace than jewelry and more than doubled the five-year quarterly average. The record consumption is based on renewed confidence in Chinas economic prospects, although JPMorgan Chase & Co. cut its forecast for the Asian nations GDP growth for 2013. The industry group said: “Chinese investors, discouraged by the weak domestic stock market, increasingly relied on gold to fulfill their investment needs. The announcement in February of impending controls to be placed on the property market further emphasize gold’s investment properties going forward.”