Report: Gold demand surges 53% in second quarter

With gold dramatically declining between the months of April and June, goldbugs and investors saw a tremendous buying opportunity. This is reflected in a new report from the World Gold Council (WGC), which found that global consumers aggressively cranked up their acquisitions of gold by 53 percent more in the second quarter compared to the same time a year ago.

The WGC concluded that the total amount of gold purchased in the form of bullion and jewelry totaled 1,083.2 metric tons. Bar and coin investment surged 78 percent. India accounted for the largest share of 310 metric tons, while China was in second place with 275.7 metric tons. In addition, last month the organization projected that China would surpass India as the world’s largest consumer of gold this year.

Central bankers were once again net buyers of the yellow metal as they acquired 71 metric tons of gold. This has been a growing trend since the first quarter of 2011, or the 10th consecutive quarter.

“The fundamental arguments for central bank buying remain in place; allocations to gold are still largely far below ‘optimal’ in many emerging markets, and the desire to diversify away from an over-dependence on the U.S. dollar continues at many central banks,” WGC said.

As the status quo persists in touting low inflation levels, the Federal Reserve continues to hint that it is withdrawing from its aggressive bond-buying program and the increase in United States Treasury yields have been factors in forcing an array of hedge funds and speculative investors to exit gold.

“This quarter again demonstrates the unique diversity of global gold demand, as the self-balancing nature of the market apparent in the previous quarter was even more clearly in evidence,” said Marcus Grubb, Managing Director of Investment at the World Gold Council, in a statement. “Across the decades, different sectors in the gold market have risen in prominence at different points in the global economic cycle and the current shifts are just part of the normal ebb and flow of what is an extremely liquid market.”

During the Friday morning trading session, gold is up $6 at $1,366.60 (at the time of this writing).

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