China Gold Bullion Demand "Could Overtake India by End of Year"

DEMAND FOR Gold Bullion in China could exceed that of India –currently the world's largest gold market – according to the chief executive of the world's second-largest Gold Mining firm by market capitalization.

Chuck Jeannes, CEO of Goldcorp, says the rapid rise of Chinese Gold Bullion demand in recent years has been somewhat unexpected.

"Three or four years ago there was no one who would have expected Chinese physical demand for gold to surpass India," says Jeannes.

"Now it looks like that could happen as early as the end of this year. And that’s while Indian demand is increasing."

China has already overtaken India as the largest private market for Gold Bars and coins, according the first quarter figures published by the World Gold Council.

Chinese investors bought 90.9 tonnes of Gold Bullion bars and coins in Q1 2011 – a 123% increase over the same period last year.

By comparison, Indian demand for Gold Bars and coins was 85.6 tonnes in Q1 2011 – an increase of 8% over Q1 2010.

Indian Gold Bullion demand remains strong, however, according to sector analysts. UBS says gold sales to India for the first seven months of the year are up 23% compared to the same period last year.

Traditionally, Indian gold demand has been characterized by heavy buying ahead of the big festivals – Akshaya Tritiya, which was in May this year, and  Diwali, which is at the end of October.

The Financial Times reported earlier this month, however, that Indians have started taking a more opportunistic approach to Buying Gold, shifting their buying patterns.

"Whenever I have a chance I invest in gold, be it at the bazaar or online I'll jump on any good deal," the FT quotes one Indian gold consumer.

"Undoubtedly over time the market is becoming less seasonal," says Tom Kendall, precious metals strategist at Credit Suisse.

Jewelers and analysts reported earlier this month that Gold Bullion demand remained robust in both India and China, despite the Gold Price hitting record highs on world markets.

However, some analysts have commented that physical demand was "largely absent" earlier this week, suggesting signs of "growing resistance" – while supplies of scrap gold were also reported to be on the rise.

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