Friday, February 5, 2010

Overseas gold demand expected to remain strong

The market for dealer gold is likely to get a considerable boost in the coming years from emerging economies like India, and perhaps most significantly, China.

A recent article in Canada's National Post newspaper quotes analyst Alan Heap of Citigroup Global Markets as saying that China is the "most important source" of gold's demand growth in the future, also noting that in 2009, demand in the country was up by 10 percent.

The newspaper noted that gold is getting increased attention from Chinese investors in light of the recent decision by the government to slow the pace of bank lending activity, which has helped to fuel concern about possible inflation.

Also, the report added that Asian banks have great potential to increase their gold holdings because they hold relatively little of it in comparison to European banks.

Elsewhere, observers have noted that an emerging middle class in China, and other countries like India, is helping to further increase demand for gold products. In general, precious metals are likely to see substantial demand from emerging economies because as industrial activity resumes in the aftermath of the recession, many applications, from automobiles to electronics, require gold, silver and other materials