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The Spokesman-Review Newspaper
Spokane, Washington  Est. May 19, 1883

Gold Demand Reaches Record High Tumbling Prices Help To Fuel 9 Percent Increase In Demand

Associated Press

Global demand for gold jewelry and coins surged last year, fueled partly by tumbling prices for the precious metal, according to industry figures released Wednesday.

The World Gold Council said gold demand overall rose 9 percent worldwide in 1997 to a record 2,935.5 metric tons.

In the United States, demand also jumped 9 percent to 376.5 tons, spurred by a more than tripling of demand for bullion coins among investors seeking to take advantage of slumping prices, the report said.

In Asia, traditionally a big buyer of the metal, demand was off 10 percent overall, reflecting the economic turmoil in some nations. In South Korea, for instance, consumers turned in gold rings and other jewelry to try to help the government in its money crunch.

Gold prices plummeted to an 18-year low of $283 a troy ounce on Dec. 12 as some central banks reduced their stores of the metal, finding better returns from holding the strong dollar and other investments. Gold has since regained some strength, with prices currently running at about $292 a troy ounce.

But that’s a far cry from the peak of $875 a troy ounce reached in January 1980, when owning gold was considered a smart move to shelter savings from runaway inflation at a time of global unrest.

Despite the overall rise in demand as prices swooned last year, consumers “tended to defer purchases whenever possible in the expectation of lower prices,” the Gold Council said in its report. “For traders, however, the greater volatility in prices meant a significant increase in activity after three relatively quiet years.”

Demand soared 13 percent to a record 2,129 metric tons in the developing countries of Asia, the Middle East and Latin America. It was up 1 percent to 806 metric tons for the United States and other industrial countries. A metric ton is approximately 2,205 pounds.