World gold sales slip for first time in 3 years

AP News
Posted: Feb 14, 2013 5:09 AM

HONG KONG (AP) — Global gold sales slipped in 2012 for the first time in three years as the biggest central bank purchases in half a century weren't able to offset a decline in demand from India, an industry group said Thursday.

The World Gold Council said that 4,405.5 metric tons were sold in 2012, down 176.8 metric tons, or 4 percent, from 4,582.3 metric tons in 2011. It's the first annual decline since 2009.

However, the value of gold sold last year rose to an all-time high of $236.4 billion because of the rising price for the yellow metal, which rose 6 percent to an average of $1,669 per ounce.

The council said gold demand in India, the world's biggest market, fell 12 percent last year to 864.2 metric tons. Demand fell 36 percent in the first half of 2012 as Indian buyers cut back because of new import duties, higher local gold prices and market turmoil over government plans to curb imports.

However, demand picked up again in the second half ahead of the wedding and festival season, which includes events such as Diwali. Fears of another hike in import duties also helped spur second-half buying.

"We see time and again that cultural and religious aspects of gold buying in India surpass any restrictions and blockage," said Albert Cheng, a managing director at the World Gold Council.

Demand in China, the world's second biggest market, held steady at 776.1 metric tons, even as the country went through a painful economic slowdown. The council said that while China's rebound from the slump bodes well for gold demand, "the indications are for a steady firming of demand rather than for strong growth."

Central banks, looking to diversify their foreign currency reserves, stepped up their purchases of the precious metal. They bought 534.6 metric tons of gold last year, the highest amount in 48 years. Some countries, including Brazil and Paraguay, started buying gold for the first time last year, the report said.

Central banks became net buyers of gold in the second quarter of 2009, and have added 1,100 metric tons to global gold reserves since then.

"The list of countries actively adding to their official gold holdings remains heavily concentrated in developing markets, which partly reflects the scale of growth in the reserves of these markets over the recent years," said the report.



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