Wednesday, May 24, 2006

Demand for gold and silver

Financial Times looks at demand for gold and silver in two seperate articles found at FT.com.

Chris Flood's report, "Investment demand for gold soars", takes a look at the latest numbers from World Gold Council's Tuesday update. While higher prices sent jewelry demand down, the increased popularity of gold ETFs helped fuel an increase in investment demand. Excerpt:

Investment inflows into gold ETFs rose by 23 per cent to the equivalent of 496 tonnes at the end of the first quarter as long-term investors such as pension funds bought bullion to aid portfolio diversification.

For a couple related items, see this post on jewelry demand from Asia and the role played by investment demand in fueling the gold price rise. This year's investment demand was also raised in April's post, "Recent gold action".

The topic of recent silver price action, as raised by FT's Chris Flood and Kevin Morrison, also touched on the investment demand brought about (largely) by introduction of the iShares silver ETF. Their article pointed out that while investor demand has helped fuel an upward move in the silver price, the ease of selling the exchange traded funds could bring about downward pressure just as easily. See the article for more details on silver's supply and demand picture.