China to overtake India in gold market

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India was considered as the biggest gold consuming country in the world during the first quarter of 2012. The gold consumption here crossed 125 tonnes of pure jewelry in the first quarter itself. Even the World Gold Council (WGC) was also stunned with this market trend. But now this has almost become history. China is making new records in gold consumption.

WGC Managing Director, Marcus Grubb said, “It is likely that China will emerge as the largest gold market in the world for the first time in 2012.” Consumption of China had gone up 20% in 2011, which was 769.8 tonnes. Sale of gold bars and the investment in coins made the fastest growth. This rose to 69% in 2011 to 258.9 tonnes, which was worth 84.5bn RMB. WGC has reported these statistics in the Gold Demand Trends Report.

China had taken long strides as the largest single jewelry market worldwide in the second quarter of 2011. Demand for gold in India however fell by 7% to 933.4 tonnes.

WGC said, “India and China continue to believe in both the intrinsic and emotional value of gold jewellery.” Indian women were known for their nature of investing in gold. But now the investment in China is also growing tremendously.

Inflation rate in China has dropped from 6.5% in last summer to 4.1% in December, and then increased to 4.5% in January. This shows the instability. China’s economy was 8.9% in the end of 2011. But there was a growth of 9.2% in initial 2011. The most reliable source for China is property. And now the Government is making strong moves towards the housing loans. Fan Jianping, Director, State Information Centre’s Economic Forecasting Department told the Financial Times that ‘he estimates real estate prices would drop 18% in 2012, after falling 27.9% in 2011.

In the meanwhile, the People’s Bank of China (PBOC) has come up with a new offer that they would cut down the bank reserve requirement ratios by 0.5%, which in fact came into effect from 24th February 2012. The country’s central bank has put an ease to the controls on bank lending and this has resulted in opening of more flow of money into economy.

So is this going to be something like India vs. China or Property vs. Gold..??

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