Asia Gold Demand Scored High

Gold

Reported by Reuters, World Gold Council (WGC) stated on Wednesday, from this April to June Asian gold demand will approach a quarterly record as bullion consumers in the region take control of supply moved up by selling from exchange-traded funds (ETFs).

WGC Managing Director Marcus Grubb said that Asian markets will experience record quarterly totals of gold demand in the second quarter of 2013. Even if ETF losses will carry on in the United States, it is somewhat probably that the gold formerly held in ETFs will find a set market amid Indian, Chinese and Middle Eastern consumers who are taking a long-term view on the prospects for gold.

It is expected from council that Indian gold imports to reach 350-400 tons in the second quarter, 200% higher than a previous year and nearly half of last year’s total imports. This too relates to imports of 256 tons in the first quarter of 2013.

Grubb said “We now definitely expect Indian demand to come in at the upper end of the 865 tons to 965 tons range that we had previously forecast for 2013 because of the effect of what happened in April,” Grubb added, as China net imports of gold reached about 160-170 tons in April alone and physical demand displays no clue of reduction, overall off take this year could reach more than 880 tons. This matches to a previous forecast of 780-880 tons.

In a recent report WGC, demand on coin and bar in China hit a quarterly record of 109.5 tons in the first quarter, up 22%, and consumption of jewelry increased to 185 tons. Investment of bar and coin in India also increased 52% to reach 97 tons over the period, whereas demand on jewelry reached 160 tons.

Second-quarter demand trends report will be published by the council in mid-August.

WESTERN INVESTMENT

Gold investment in the West, yet, plunged this year as a brighter view of the U.S. economy encouraged investors to set their eyes on other assets, for instance stocks over bullion.

As of the end of April, ETF holdings had dropped by 13% (350 tons), with half the losses recorded over the past month.

SPDR Gold Trust Holdings (the world’s largest gold-backed ETF), have lost 74 tons since the start of April, in comparison with losses of nearly 120 tons in the first quarter.

These investment vehicles, which issue securities backed by physical metal, had showed a common way to advance exposure to the gold price since the beginning of the financial crisis.

Grubb said “We don’t expect to see anything like the same exit of gold from the ETFs that we’ve seen in the first four months of the year … the pace of redemptions is flattening out now,”