Noting the financial crisis that continues to hit and stall the eurozone, the World Gold Council (WGC) said it expects gold demand from China to pare from the 1,000 metric tonnes it earlier predicted in May to just about 870 metric tonnes overall for 2012.
Gold pellets being poured
Although there will still be marked increases in gold acquisition by the world's second-largest gold buyer after India, these will still be relatively lower compared to gold acquisitions made in 2011.
"From our talk to the industry people, we gathered that the Europe's debt crisis has led to a firmer U.S. dollar, which in turn suppressed the investors' willingness to buy gold," Albert Cheng, Far East managing director of WGC, said in Bloomberg News. "Gold jewelry is also discretionary consumption, so consumers feel they can wait."
Demand for gold jewellery as well as for bars and coins may grow 7.7 per cent to 550 metric tonnes and 24 per cent to 320 metric tonnes, respectively, for 2012. But if compared, this is lower versus the 13 per cent and 38 per cent marked growth with last year's performance, respectively.
Mr Cheng, who released the 1,000 metric tonne forecast in May, said second quarter sales of gold in China were slower than whT WGC had expected mainly because local consumers refrain from buying when a rally pauses or suspends.
Still, he believed this is only momentarily.
"We are still optimistic on China's gold-investment demand as investors here don't have much choice in terms of investing their wealth," Mr Cheng said. "The stock market's performance is poor and the property market's rally has stalled."
In May, the WGC reported China's gold demand hit a record 255.2 metric tonnes in the first three months, versus 232.5 metric tonnes a year ago.
Gold sales in China usually turn quiet in the second quarter.
"Overall, demand should be lower in the three months to June 30 compared with an exceptionally good first quarter," he said.
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