China could well displace India as the country with the greatest appetite for gold in 2012. Its jewellery and investment demand reached 769.8 tonnes in 2011, representing 82 per cent of India's level of demand for gold which was at 933.4 tonnes, according to World Gold Council (WGC). The WGC report said that the Chinese figure ``has only recently risen above the 50 per cent mark, reflecting the strength of China's presence in the gold market.'' Commenting on the Gold Demand Trends in 2011, Marcus Grubb, Managing Director, Investment, WGC, said, “Looking particularly at Asia, there was a major boost to the overall figures from the increase in Chinese demand, which is a trend that we see continuing over the next year. It is likely that China will emerge as the largest gold market in the world for the first time in 2012.”
Further, both countries face separate headwinds in 2012, but China with its large reserve base, adjustable exchange rate and political decisiveness may be better positioned to tackle a slowdown posed by falling exports and the policy-tightening pursued during most of 2011.
“India's importance in the gold market will not diminish, even if demand growth softens. Not only is India a key player in the global gold maket, but the domestic drivers of gold demand are largely independent of outside forces, firmly supporting gold's diversified demand base.
These factors will promote continued growth in demand over the long-term even as the short-term outlook for both countries is for a modest slowdown,” the report said.
