By Marcus Leach

The outlook for global gold demand will remain robust throughout 2011 against a background of another strong quarter, the geographic and sectoral diversity of demand and strong fundamentals, the World Gold Council said today.

According to the Gold Demand Trends report for Q1 2011, demand for gold in the rest of 2011 will be driven by a number of key factors:

• Prevailing global socio-economic conditions will continue to drive investment demand for gold. These include: continued uncertainty over the US economy and the dollar, ongoing European sovereign debt concerns, global inflationary pressures and continued tensions in the Middle East and North Africa.

• Sustained momentum in Chinese and Indian jewellery demand will underpin growth in the jewellery sector throughout 2011. Strong demand in India during the recent Akshaya Tritiya festival and the beginning of the wedding season, alongside extensive purchasing on dips in the gold price, underlines the strength of the Indian market.

• Net purchasing by the official sector is expected to continue in 2011 as central banks turn to gold as a means of diversifying their reserves into an asset with no credit or counterparty risk.

Marcus Grubb, Managing Director, Investment at the World Gold Council commented:

“The resilience of gold during recent volatility in the commodities market exemplifies the strength of the global gold market and its unique demand drivers. High levels of investment demand across the world, strong demand in India and China, the continued strength of the technology sector together with central bank purchasing demonstrates gold’s diverse demand drivers. We anticipate continued strong demand during the rest of 2011.”

Albert Cheng, Managing Director, Far East at the World Gold Council commented:

“Chinese appetite for gold has increased rapidly over the past few years. In March 2010, we predicted that gold demand in China would double by 20201, however, we believe that this doubling may in fact be achieved sooner. Increasing prosperity in the world’s most populous country coupled with their high affinity for gold will serve to drive demand in the long-term. Near term inflationary expectations are likely to support the investment case for gold.”