ELKO - Global demand for gold rose in 20 11 to the highest value yet and to the highest tonnage since 1997, according to the World Gold Council.
Demand was at 4,067 metric tons in 2011, worth an estimated $105.5 billion. The council said in its new Demand Trends that this was the first time global demand exceeded $200 billion.
Demand was up along with gold prices. A record gold price of $1,895 per ounce was set on the London p.m. fix on Sept. 5-6, 2011.
The investment sector was the key reason for the increase in demand, with investment demand up 5 percent to 1,641 metric tons from the 2010 record. India, China and Europe led the demand, according to the report released last week.
Central banks also continued the trend established in 2010 of being net buyers of gold. Purchases by central banks soared from 77 metric tons to 439.7 metric tons.
"What we can see from these 2011 figures is that there were two main factors driving the results: Asian growth and optimism on the one hand and western desire to protect assets against uncertainty on the other," said Marcus Grubb, managing director of investment for the World Gold Council.
"Looking particularly at Asia, there was a major boost to the overall figures from the increase in Chinese demand, which is a trend that we see continuing over the next year. It is likely that China will emerge as the largest gold market in the world for the first time in 2012," he said in last week's announcement on release of the Demand Trends.
"What is certain is that the long-term fundamentals for gold remain strong, with a diverse and growing demand base, coupled with constrained supply side activity," Grubb said.
China and India remain the cultural centers of gold, generating 55 percent of global jewelry demand and 49 percent of global demand, according to the report.
India remains the largest country for demand with 933.4 metric tons, which the report states is notable considering the volatility of the gold price and the weakness of the Indian rupee against the U.S. dollar during the second half of the year.
Gold jewelry accounted for more than 500 metric tons in India, the World Gold Council reported.
In China, annual demand of 769.8 metric tons was up 20 percent year-on-year as a result of increases in both jewelry and investment. The largest rise was in investment, where demand of 258.9 metric tons.
There was also a surge in demand in Europe with the region posting its seventh consecutive annual gain to 374.8 metric tons, according to the report. Germany and Switzerland were the main drivers of growth in the region as the eurozone remains in turmoil and the need for asset protection continues to be a priority, according to the report.
The World Gold Council also reported that fourth-quarter investment shows a significant increase of inflow into gold exchange-traded funds to 86.8 metric tons, compared with just 22.3 metric tons in the fourth quarter of 2010.
The annual comparison is much weaker, however, as inflows of 154 metric tons for 2011 are significantly lower than 367.7 metric tons for 2010, which was an exceptional year for ETFs.
The council also reported demand for gold bars and coins continues to be robust and was another major contributor of the increase in investment demand. Gold bar and coin demand rose 24 percent to 1,486.7 metric tons.