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Upsurge of purchasing gold cooling down in China

(People's Daily Online)

13:36, August 24, 2012

According to "Gold Demand Trends Q2 2012" recently published by the World Gold Council, the gold demand in China has dropped by seven percent in the second quarter of 2012.

Why will the gold demand in China, which is the world's main gold demand country, decline? How about the future trend of the gold? Whether will Chinese people keep the enthusiasm of buying gold?

The declining trend of gold demand will not continue in the future

"China"s gold demand was on the rise in the first half of the year," said Zhang Bingnan, secretary general of the China Gold Association.

"The second-quarter decline in gold demand was just an isolated phenomenon, and was caused by the exhaustion of investors" enthusiasm last year when gold prices rose sharply."

We believe that instead of continuing to decline, gold demand will rebound in the second half, and gold prices will resume their rally, Zhang said.

Chen Weixian, head of the WGC's Greater China investment department, said that in this context, gold performed as expected, acting as both a store of value and a source of liquidity. According to current data, gold"s supply and demand fundamentals remain unchanged.

The trends of the spot gold market show that gold prices tend to rise steadily after surpassing certain major marks.

Analysts noted that gold prices started falling around the end of the first quarter. International gold prices rose nearly 11 percent in January to 1,735.5 U.S. dollars per ounce, and fluctuated around 1,700 U.S. dollars per ounce in February. Gold prices dropped markedly in May to around 1,600 U.S. dollars per ounce. Now, they are beginning to rise steadily again.

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