According to Gold Demand Trends released by the World Gold Council (WGC) recovery in the economy and high rural income as the key factors that lead to revival of demand. Good performance of the agricultural sector also had a positive impact on incomes in the rural areas which contributed to the rise in demand for gold.

The report states that the reduction in the rates of inflation also reduced the prices of basic household goods, a major factor that had diverted spending away from gold in the previous year. However, the total demand for the first-half of 1999 was 414.4 tonnes, 10 per cent below the 1998 figure of 459.2 tonnes.

Meanwhile the global demand for the yellow metal increased 16 per cent during Q2 99 compared to the same period last year. Demand in countries monitored by WGC was 810 tonnes, a record for Q2 and a new all time high for any three month period.

The strong performance in Q2 was due to 32 per cent increase in investment over the same period last year and a gain of 13 per cent in worldwide jewellery demand. Broader appreciation worldwide for the role of gold as monetary asset brought strong gains in the demand for gold as an investment in as diverse countries as USA, Japan, Brazil, Indonesia Thailand and Vietnam.

Financial institutions manager, WGC Derrick Machdo stated that the increased demand witnessed in some Asian countries, badly hit by the recent economic and currency crisis only validates people's faith in gold. In addition to this, the worldwide increase in demand for gold as an investment reaffirms the fact that the gold still is valued as an asset that assures safety and security in adverse times.

Referring to recent reports about gold imports shooting up by 230 per cent from 24 tonnes in June 1998 to 80 tonnes in June 99, Machado stated that the actual gold import figure for June 1999 was 57 tonnes and not 80 tonnes as reported.

There was continued recovery in South-East Asia and South Korea, with demand rising to over 90 per cent of the levels seen before the economic and currency crisis.

A strong performance in Taiwan brought an encouraging increase in North Asia. Demand was also higher in the Middle East, while Japan showed continuing recovery.