China's Super India into the World's Largest Gold Investment Market

On May 19th, local time, the World Gold Council stated that China has overtaken India as the world's largest gold investment market, and its demand for gold is more than double that in the first quarter of last year.

In the first quarter of this year, China’s investment demand for gold increased from 40.7 tons in the same period in 2010 to 90.9 tons, and reached USD 4.1 billion in US dollars. At the same time, Indian gold investment demand totaled 85.6 tons, slightly higher than the 79.3 tons recorded in the same period of last year. China overtakes India to become the world's largest gold investment market.

According to the “Wall Street Journal” report, the association stated that the Central Bank of China has increasingly adopted a “very liberal” policy on gold imports. Since last August, China has allowed more banks to participate in gold trading. Last year, half of China’s gold consumption came from imports.

The report quoted the person in charge of the Association’s Far East Region as saying that “China had almost no restrictions on gold imports last year” and pointed out that China’s control over gold trading is because *** is not yet freely convertible. Since gold is considered as the local currency, the government has previously tightened its inflow restrictions on a large amount of gold to prevent gold from substituting the local currency and destroying the value of the currency.

The British Broadcasting Corporation (BBC) quoted the World Gold Council as saying that gold investment demand was strong at the beginning of this year, reaching 310.5 tons. Demand for gold investment peaked in the second quarter of last year, in part because of Europe's deep sovereign debt crisis. The report pointed out that in the past 18 months, the price of gold rose by nearly 50%, the current price is close to 1,500 US dollars per ounce.

The report pointed out that in the traditional sense, gold can make up for the uncertainty of economic development over a period of time. In April 2010, gold investment demand reached 572.6 tons. Philip Newman, head of research at GFMS, a precious metals company, said: "Although investment demand is still lower than in the second quarter (last year), it is still at historically high levels."