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Gold buying hits new high in 2012, volumes ease

Last updated: 09:27 14 Feb 2013 EST, First published: 10:27 14 Feb 2013 EST

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Gold demand hit an all-time record by value in 2012, though the amount physically bought eased for the first time in three years.

Gold purchases totalled US$236.4bn and were buoyed by record gold prices, according to the World Gold Council’s annual review.

The gold price hit a record high of US$1,712 in the last quarter of 2012, though has since eased back.

Total volumes over 2012 were 4% lower at 4,405 tonnes, with strong central bank and exchange traded funds (ETFs) demand not enough to offset a reduction in the key consumer market of India.

Central banks added a total of 534.6 tonnes, the highest level for almost fifty years as they hedged against a devaluation of paper currencies.

Central banks have bought more than they have sold for the past eight quarters in succession. Brazil, Russia and South Korea were especially active. Iraq also joined the ranks of the gold buyers.

The UK ranked 18th with 310 tonnes in total, well behind the 8,133 tonnes held by the US and Germany’s 3,391.

Former PM Gordon Brown sold off the majority of Britain’s reserves more than a decade ago when the gold price was at a 20-year low.

India and China remained the largest consumer markets for gold.

After a poor start to the year Indian demand picked up in the second half ahead of a well-flagged tax increase. Fourth quarter consumption was 41% higher year-on-year.

Chinese demand was little changed in 2012, with weaker jewellery demand offsetting a slight increase in investment demand.

The WGC expects both Chinese and Indian demand will grow as the economic outlook improves.

Elsewhere, the jewellery, technology, and investments sectors all saw lower demand.

Gold production rose by a modest 0.4% to 2,847.7 tonnes, but this was still well above the five-year average.

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