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China's gold demand to reach 750 tons this year

BEIJING - Strong demand in investment and jewelry will drive China's total gold demand to 750 tons this year, the World Gold Council (WGC) said here Thursday.

Buying gold as means of investment has become a more common choice for Chinese in the past third quarter as it is viewed as a safe investment during these uncertain economic times, said the WGC in its Gold Demand Trends report for the third quarter of 2011.

Demand for gold bars and coins in China expanded by 24 percent from a year earlier to 60.2 tons in the third quarter.

In the first nine months, total investment demand reached 204.1 tons, said Zheng Lianghao, managing director of the WGC's Far East division.

Meanwhile, Chinese gold jewelry demand was 13 percent higher year-on-year at 131 tons as retail chains expanded their networks in smaller cities to meet increasing demand fuelled by rising income levels, said Zheng.

This compares to a global demand of 465.6 tons jewelry in the third quarter, down 10 percent year-on-year.

Globally, gold investment demand reached 468.1 tons in the third quarter of 2011, up 33 percent from 352.1 tons in the corresponding quarter in 2010.

"Unsurprisingly investment demand for gold was a key driver during the third quarter," said Marcus Grubb, Managing Director of Investment.

"Increasing levels of inflation, the US credit rating downgrade, a worsening eurozone sovereign debt crisis and the lackluster performance of many assets drove investors to increase holdings in gold in order to protect their wealth," he said.

He said investors are likely to continue to seek protection from economic uncertainty, which shows no signs of abating.

Global gold demand in the third quarter of 2011 increased 6 percent year-on-year to reach 1,053.9 tons, up from 991.1 tons in the third quarter of 2010, according to the WGC.

Gold supply was 1,034.4 tons in the third quarter of 2011, 2 percent higher than year-earlier levels of 1,013.0 tons, it said.

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China to explore sulphide ore deposit

BEIJING - China has gained the right to explore a polymetallic sulphide ore deposit located in the Indian Ocean over the next 15 years.

The contract making the action possible was signed Friday between the China Ocean Mineral Resources Research and Development Association and the International Seabed Authority.

The contract awarded the Chinese association exclusive rights to explore a 10,000-square-km of international seabed in the southwest Indian Ocean.

According to the contract, the Chinese association will have to give up 75 percent of the ore deposit region within 10 years before enjoying preemptive rights of commercially mining the remaining 2,500-square-km.

The Chinese association will also have to fulfill specified duties of conducting environmental monitoring, environmental baseline research and training scientific workers for other developing countries, according to the contract.

Friday's signing is the second time China has gained the right to explore an international seabed ore deposit. In 2001, the country obtained rights to prospect a 75,000-square-km area of international seabed for polymetallic nodule ore in the northeast Pacific Ocean.

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China shines in gold jewelry demand

ROBUST sales pushed China to replace India as the world's largest gold jewelry market in the third quarter, the World Gold Council said yesterday.

The demand for gold jewelry in China sparkled 13 percent year on year to 138.6 tons in the third quarter, the WGC said in its quarterly report yesterday.

The WGC said China's third and fourth-tier cities fueled most of the increase in demand as retail chains continued to expand their sales network there.

The demand for gold jewelry among Chinese in the country accounted for about 30 percent of the world's total.

Albert Cheng, the WGC's managing director for the Far East region, said China's bullion demand may exceed 750 tons this year, which include 500 tons of jewelry demand and more than 250 tons of investment demand.

China's gold investment demand was 62.2 tons in the third quarter, a rise of 26 percent on an annual basis, according to the WGC report.

"Favored by all the bullish factors, China's total gold demand in 2012 will continue to grow by double digits," Cheng said, adding that China's total demand should rise to 800 tons next year.

Rising investment demand in China was largely due to concerns over inflation and fears that gold prices may rise further, the report said.

China is the second-largest gold market in the world after India.

Globally, gold demand in the third quarter gained 6 percent year on year to reach 1,053 tons.

Fueled by China's growing appetite for gold, global demand for gold investment in bars and coins increased 29 percent to 390.5 tons in the third quarter from the same period a year earlier.

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