Gold scrap supply steady on yellow-metal surge

LONDON (Commodity Online): With the onset of the global financial crisis in late 2007, global scrap supply of gold had witnessed a surge in the past two years as people scrambled to sell old and unused jewellery. Several online sites had reported progress in sale of household gold and silver ornaments. The trend is still continuing as USA, Europe and Middle East have seen a continued growth in scrap gold market, according to Gold Survey, 2011 released by GFMS Ltd.
Higher gold prices coupled with inflation and economic recessionary trends resulted in more people selling scrap gold to dealers. The GFMS Gold Survey for 2010 had pointed that elevated prices and economic recession led to surge in scrap supply on the back of profit taking and distress selling. GFMS data had pointed out that scrap gold constituted 40% of global supplies of the yellow metal.
Philip Klapwijk, Chairman of GFMS Ltd said that support for higher gold prices was not restricted to investment demand, "last year we saw signs of the gold market having adjusted to higher prices while jewellery demand partially recovered, following2009's steep losses, scrap supply was little changed, even though gold prices posted a series of record highs in 2010".
Much of the lift in jewellery demand was in fact concentrated in India and China, which benefitted (respectively) from positive price expectations and a still robust economic backdrop. "Even so, key jewellery consuming nations remained net suppliers of gold to international markets."
GFMS in its Gold Survey 2011 points out that investment demand for gold will remain robust in 2011 on inflation concerns and government finanaces. Jewellery demand is also set to gain as consumers come to accept the prevailing price levels. Hence, one should not be surprised if gold prices climb to $1600 by the end of the year.
Meanwhile, in global markets gold prices rebounded on Wednesday after a fall on inflation concers in China, a major buyer of the yellow metal. China's central bank raised interest rates on April 5 for the fourth time since October, underlining Beijing's determination to clamp down on inflation. Physical buying of gold has gained in India due to ongoing marriage season and China market has gain on inflation concerns.