Gold Gains New Glitter In Market Demand For Precious Metal Surges 17%, Hits Record High

Global demand for gold jewelry, coins and other uses surged 17 percent to a record 770.6 metric tons in the first quarter of the year, according to figures released Wednesday.

The sharp decline in gold prices - to $351.28 per troy ounce in the first quarter from $400.13 per troy ounce a year ago - helped boost the popularity of the precious metal, said the World Gold Council.

The council, which monitors about 80 percent of the world’s gold markets, reported demand was strongest in the developing countries of Asia, the Middle East and Latin America. Demand soared 22 percent in those countries in the January-March period to a record 586.8 tons.

In the United States, Japan and other developed countries, demand rose 2 percent to 183.8 tons.

The previous record for gold demand was 736 tons in the fourth quarter of 1992. The council focuses mainly on purchases of gold for sale to consumers in assessing demand but also considers data on gold imports and jewelry fabrication.

“Jewelry demand was the mainstay of this very sparkling performance in the first quarter (of 1997), with a gain of 17 percent,” Richard Scott-Ram, economic adviser for the gold council, told a news conference in New York.

In parts of the developing world, gold jewelry is purchased not only for adornment but also as an investment. Gold also is held by investors in the form of gold bars and coins, and it is used in dentistry and for industrial purposes.

India, the world’s largest consumer of gold, posted a 38 percent increase in demand to a record 161.7 tons in the first quarter of the year. The gain was due largely to growing prosperity among the population, lower local prices and weddings and festivals in January and February.

In the United States, the second-largest gold market, demand grew 9 percent to 82.9 tons in the first quarter. “This reflected buoyant jewelry consumption, a sharp upturn in coin demand and steady progress for dental demand,” said the council’s quarterly report.

Other countries recording sharp increases in demand were: Indonesia, up 45 percent to 42 tons; Saudi Arabia, 44 percent to 68 tons; Turkey, 44 percent to 39 tons, and Vietnam, 80 percent to 18 tons.

Demand in Mexico rose 33 percent to 8 tons; Thailand was up 22 percent to 42 tons; and Brazil gained 12 percent to 9.5 tons. Overall demand in Europe was 3 percent higher, at 54.5 tons.

China posted a 7 percent drop in demand to 55 tons; Japan was down 8 percent to 47 tons; and Taiwan was off 21 percent to 41 tons.

Scott-Ram said demand has remained strong at the start of the second quarter.

“It may be too much to expect demand to keep up this record-breaking pace for the rest of the year,” he said. “But it’s a very, very excellent start for 1997.”