The demand rose to 1,053.9 tonne in the quarter through September, although in value terms, the consumption hit a record $57.7 billion. Gold imports to India fell for the first time in five quarters by a fifth to 200 tonnes in July-September as surging inflation adversely impacted disposable incomes, the World Gold Council (WGC) said in a statement.
Investment climbed 33% to 468.1 tonne during the period with European consumption rallying by 135% in value to 4.6 billion euros, equivalent of 118.1 tonne, as fear intensified the sovereign debt crisis may spread beyond its current epicenter of Greece and Italy.
Chinese demand for jewellery surpassed that in India for the first time since early 2009, the World Gold Council, an industry group, said in its quarterly Gold Demand Trends. Chinese buyers stepped up their purchases of jewellery by 13% to 131.0 tonne.
Chinese buyers stepped up their purchases of jewellery by 13% to 131.0 tonne, in stark contrast to Indian buyers, who bought 26% less jewellery in the third quarter of this year relative to last year at 125.3 tonne.
Fitch Ratings has warned that although said further contagion from Europes debt crisis would pose a risk to American lenders that have direct exposures to debt-trapped Greece, Ireland, Italy, Portugal and Spain.
Investment demand rose at a much faster pace during the period to offset a drop in the consumption of jewellery, traditionally the biggest driver of gold purchases, according to the Council report.
Global demand for gold jewellery fell 10% to 465.6 tonne, although high prices of the metal ensured a 24% rise in consumption value to $25.5 billion. Increasing levels of inflation, the US credit rating downgrade, a worsening eurozone sovereign debt crisis and the lacklustre performance of many assets drove investors to increase holdings in gold in order to protect their wealth. Given golds proven risk mitigation properties, it is likely that investors will continue to seek protection from economic uncertainty, which shows no signs of abating, WGC Managing director Marcus Grubb said.
Gold rallied to a record $1,921.15 an ounce on the London Metals Exchange on September 6 and is heading for an 11th straight annual increase , highlighting its persistent appeal as an investment tool.
Demand for gold bars and coins jumped 29% from a year earlier to 390.5 tonne, although at $21.4 billion, the rise in value is even more dramatic at more than 78%.
Investment in gold exchange-traded funds and similar products rose 58% to 77.6 tonne in the third quarter. Central banks bought 148.4 tonne during the period to raise allocation to gold as a percentage of total reserves to mitigate macro-economic risks. Gold supply rose 2% to 1,034.4 tonne in the third quarter as recycled output increased 13% to 426.5 tonne, the council said. Mine production rose 5% to 746.2 tonne, it added.