Oidon Company, Ltd. (OIDN)

[Spellbound]

Gold Demand Grows Despite High Price
Wednesday May 16, 3:11 pm ET
By Lauren Villagran, AP Business Writer

China, India Feed 22 Percent Growth in Worldwide Gold Demand to $17.38 Billion in 1Q

Ref - http://biz.yahoo.com/ap/070516/gold_demand_market_spotlight.html?.v=1

NEW YORK (AP) -- Gold got back some of its glitz in the first quarter following soft sales a year ago, as buyers in China and India flocked back to what has become a calmer, albeit pricier, market.

Globally, buyers spent $17.38 billion on gold in the first quarter, the World Gold Council said Wednesday. That's up 22 percent from $14.21 billion a year earlier, when sharp price swings scared off buyers who waited for the market to gain direction.

This past quarter, buyers settled into a market with average prices about $100 higher, around $650 an ounce.

The absence of the extreme volatility of early 2006 increased gold's appeal, said council spokesman George Milling-Stanley.

"It's not the absolute price gold reaches," he said. "It's how it gets there. A volatile price makes consumers all over the world hang back."

Demand growth came from the jewelry and industrial markets, while investor spending on gold declined as the growth of newer investment vehicles such as exchange traded funds slowed.

Jewelry demand swelled 38 percent to $11.97 billion, according to the report.

Buyers in India, the world's largest consumer of gold, devoured 50 percent more gold in the recent quarter than they did a year ago amid robust economic growth and a strong start to the wedding season. Chinese consumption jumped by nearly a third amid robust buying during the New Year's celebration's in mid-February.

Gold demand for industrial applications and dental fillings increased 18 percent to $2.34 billion.

Meanwhile, investor interest in gold fell 13 percent to $3.07 billion from $3.55 billion as last year's excitement about gold investment subsided. The volatility that repelled jewelry buyers in 2006 was a boon to investment demand at the same time.

Exchange-traded funds, which bought up 112.9 million metric tons (1,000 kilograms or 1.1 tons) of gold in the first quarter of 2006, represented just 36.4 million metric tons of gold in the recent quarter. Increased investment in more traditional gold products, including bars and coins, partially offset that decline.

While total demand in dollar terms rose 22 percent, volumes of gold sold edged up 4 percent at the same time to 831.7 metric tons.

So far in the second quarter, imports into India look "extremely healthy," Milling-Stanley said.

"Provided there is no return to the exceptional volatility of 2006, we are very optimistic for a good performance in 2007, in volume terms as well as value terms," he said.