Gold market surplus to widen in 09
The gold market surplus will widen from 60t (1.9m ounces) to 284t (9.1m ounces) this year, despite the fact that total gold supply is expected to weaken slightly to 3,770t (121m ounces), says the VM Group.
The Group said in its recent Yellow Book that although this was the largest surplus for a number of years, it was "relatively modest" given the potential for investment demand outside of ETFs and coins to absorb this metal.
"It does emphasise however, how it is investment demand that is driving this market, given the decline in support from dehedging and jewellery sales," commented the VM Group.
Gold mine supply is expected to fall by 1.3% year-on-year to 2,295t or 73.7m ounces in 2009.
The Yellow Book said that lower mine supply will continue to impact world gold supply in 2009 as a further decline in South African production alone will offset higher production in China, Russia and Peru....
The Group said that on the demand side adornment jewellery demand would rise slightly, but it expected sharp falls in the event of a sustained gold rally.
The "stellar performance" on the demand side will come from ETF demand, which could add another 400t by year end, though this estimate may be too conservative.
MORE, including central bank sales.