Gold as an important investment.Gold consumption spurts for the first time in 4 years: WGC
TIMES NEWS NETWORK[ FRIDAY, FEBRUARY 04, 2005 11:09:35 PM]
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LONDON: Global gold consumption grew for the first time in ’04 as economic growth in India, the US and China spurred and investors sought to hedge against a declining dollar, the World Gold Council said.
Consumption grew as much as 8%, to 2,725 tonnes, and compared with 2,524 tonnes in ’03, after three years of decline, said Moaz Barakat, MD for the industry group for the Middle East, Turkey and Pakistan funded by gold mining companies.
“More wealth in places like India and China generated a feel-good factor, and encouraged people to buy,” Barakat said in Dubai. Demand in India, the world's top gold consumer rose the fastest in six years.
Prices have climbed 6% over the past year, reaching a 16-year high in December, as the dollar dropped 4% against a basket of six major currencies amid widening US trade and budget deficits.
As gold is priced in dollars, it tends to gain when the US currency drops, as investors purchase the metal to hedge against declines in US assets.
India’s economy grew at the fastest pace in 15 years in the 12 months to March 31, ’04, at 8.5%, according to government data. Only China grew faster among the world’s 20 biggest economies.
Demand for gold in Saudi Arabia, the world’s fifth-largest consumer of the metal, also rose for the first year in four as record oil revenue boosted wealth.
“People had a lot of money and they didn’t know what do with it,” Barakat said. Saudi Arabians also bought more gold to hedge against the declining US currency, and because they thought gold prices might go higher, Barakat said.
“In India, gold will continue to be an important avenue of investment for its sentimental value and because there is more money in the hands of the average Indian,” said Rajini Panicker of Refco.