Demand for the yellow metal reaches a new record level

Physical demand for gold reached a record level of 1,793 tonnes in the first half of 1995, according to Gold Fields Mineral Services (GFMS).

The U.K.-based firm attributes the rise to increased jewelry fabrication in India and Southeast Asia, combined with stronger demand from Japanese investors.

North American investors and investment funds were comparatively neutral, with total North American and European investment absorbing only 42 tonnes of gold for the first six months of 1995.

On the supply side, mine production for the period fell by 1%, dropping to 1,110 tonnes. However, the shortfall in South Africa, the U.S., Australia and Canada was partially offset by rising output in China and the Commonwealth of Independent States.

The gold price in U.S. dollars moved into an even narrower trading range, falling to between US$372 and US$395. GFMS says this was caused by two factors: increased forward sales, which had to be absorbed by the market near the top of the trading range, and the short-run sensitivity of physical demand.

Physical demand is expected to remain buoyant throughout the year as a result of increased jewelry fabrication prior to Christmas and the Chinese New Year.