China becomes world's biggest market for gold investment

In the first quarter of 2011, China's gold demand grew rapidly, and China has overtaken India to become the world's biggest market for gold investment, according to the "Gold Demand Trend Report" recently released by the World Gold Council (WGC).
The report indicates that Chinese investors purchased a total of 90.9 tons of gold bars and coins in the first quarter, which is twice the amount of the same period last year and higher than India's 85.6 tons. In terms of the demand for gold investment, China is also 2 percent higher than India's 23 percent.
The report also shows that in the first quarter of 2011, China's total demand for gold was 981.3 tons, the demand for trading gold bars and coins rose by 52 percent, and the average gold prices increased by 25 percent. The sharp rise of gold purchases is basically the result of the demand for investment.
Furthermore, the gold price dropped by 8 percent at the end of January to 1,300 U.S. dollars per ounce, which also created a promising opportunity for investors. As for the growth of China's demand, the WGC thinks that since China's inflation expectations have not yet decreased, the wealth preservation function of gold is still one of the main factors behind the investment craze.
Recently lots of banks and jewelry stores in China have added gold sales services. Eily Ong, investment research manager of the WGC, thinks that the surging demand for gold in China is surely astonishing, but he thinks the trend will continue.
Although China has overtaken Indian to become the world's biggest market for gold investment in the domain of gold bars and coins, India is still recognized as the world's largest market for gold trade. Based on the quarterly report by the WGC, if jewelry consumption and other forms of personal consumption are taken into account, India's demand is still higher than China's.
In addition, as China is becoming the center for electronic components manufacturing and assembly, demand for gold in technology sectors is still on the rise.
By People's Daily Online
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