Global Demand Shifts in Gold

Topics: Investment, Central bank, Gold as an investment Pages: 3 (846 words) Published: June 1, 2013
Global Demand Shifts in Gold

Demand for gold is shifting at a global level. Annual gold demand measured on a value basis increased to an all-time record in 2012 ("Investment: Demand and Supply," 2013). There are several different factors that influence the demand for gold in global markets. Gold demand is determined by “socio-economic and cultural incentives” that drive each global market in different ways ("Investment: Demand and Supply," 2013). Economic changes in the market means changes in demand for products such as gold. Gold is a unique element that has historically been considered a valued metal with a consumer demand for gold in jewelry, currency, and decor. More recently, “Gold has witnessed a bull run with 12 consecutive years of price increase” which is surprising because the world economies had experienced the worst recession since the great depression (“Where is the Gold Price Heading?”, 2013, p. 19). There is an ongoing debate in the global investment community whether drops in the price of gold “indicates a reversal in gold fortune” or “presents a great buying opportunity” (“Where is the Gold Price Heading?”, 2013, p. 20). The Goldman Sach’s February 25th, 2013 forecast indicated a cut in the gold price target and a continued downward spiral based on the assumption that the 12-year-bull-run is over (“Where is the Gold Price Heading?”, 2013, p. 20). On the other hand, “bulls” believe that investors have been wrong in the past and agree with global banking giant HSBC that “gold’s long term attractiveness remains in place” (“Where is the Gold Price Heading?”, 2013, p. 20). To look more closely at gold demand, various drivers must thoroughly be examined as well. “Gold has been used in jewelry for thousands of years for its rarity, ease of mechanical processing, resistance to corrosion and its exceptional color” (“Where is the Gold Price Heading?”, 2013, p. 20). Jewelry has consistently accounted for a majority of gold demand. India is the...
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