Economic Conditions to "Stay Positive for Gold Investment"

WORLDWIDE Gold Investment demand rebounded in the second quarter – having fallen at the beginning of 2011 – according to a report published by a leading precious metals consultancy.

In addition, so-called safe haven demand to Buy Gold has "picked up strongly in the third quarter"- the result of sovereign debt crises on both sides of the Atlantic, concludes the report published this week by Thomson Reuters GFMS.

"Early 2011 saw a wave of profit taking," said GFMS chairman Philip Klapwijk at the launch of Gold Survey 2011 Update 1.

As the year progressed, however, markets were hit by the escalating European debt crisis, as well ratings agency Standard & Poor's downgrade of the US sovereign credit rating.

"In some ways, the confluence of events created almost the 'perfect storm' for Gold Investment," said Klapwijk.

"The lack of resolution to sovereign debt matters and ongoing gloomy news on the economic front also make it likely that this pro-gold environment will continue."

The report forecasts that global Gold Investment demand – defined as the sum of implied net investment, physical bar investment and all coins and medals – will be around 1750 tonnes in 2011, a 4.3% rise on 2010.

"Economic conditions will stay positive for Gold Investment, with the partial exception of some scope for further US Dollar appreciation," the report says.

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