What is surprising is the demand from US consumers. Annual demand for gold jewellery (by volume) there increased for the first time since 2001. US gold consumption was up 18 per cent in 2013. The US mint reported a 29 per cent increase in the number of American eagle coins sold. For the pros, gold as an investment may be passe.
Gold prices up, but is it just seasonal buying?
Now with China a bigger buyer, the picture is more complex. Gold buying ticks up in India during months when the country tends to see an increase in weddings, typically February, May and July. That should explain why gold is doing so well in February, but Mr. Bridges notes that Indian demand has recently slumped because of high inflation and economic malaise in the country. That means much of Februarys gain cant be explained by India alone. At the same time, Chinas new year celebrations, another period of strong gold buying, peaked last month. With Indian imports lower Elevation Group and the Chinese New Year celebrations largely over, the recent strength in gold prices appears to be driven by something other than seasonality, Mr. Bridges said. Unfortunately, the answer might simply be a temporary bounce after the strong selloff last year.