Wednesday, August 19, 2009

Demand for gold slumps to six-year low - Daily Telegraph

Daily Telegraph reports demand for gold has fallen to a six-year low in the last quarter as big gold-buying countries such as India and Turkey retreated from high prices. Jewelery buyers, who are the main drivers of the gold price and make up more than 50% of consumption, withdrew from the market with volumes down by 22% in the last quarter. Electronics producers, which need gold for components such as smart-cards, cars, medical implants and sensors, also appear to have been buying less of the precious metal as consumer confidence remains depressed. Rozanna Wozniak, investment research manager at the World Gold Council, said that despite a drop in gold jewelery sales, demand for gold as a long-term investment prospect rose by 45% over the last three months. Traders are still clinging to the commodity as a safe haven during the recession and central banks bought 14 more tons of gold than they sold -- their first net purchase for the last decade. "We have seen pockets of demand coming back and people looking for opportunities to buy back in but the biggest factor in lower demand is the 31% rise in the gold price since last year," she said.

This is interesting... what to make of it a bullish or bearish signal? I like gold long term as a asset class to own.

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