...Sensitive to Financial Markets Gold is a highly financialized commodity, with supply and demand heavily influenced by investment and scrap sales, as very little is used for industrial production. With mine supply relatively stable in recent years, price declines have been precipitated by a pullback in investment demand. A sell-off by exchange traded fund (ETF) investors of 880 tonnes in 2013 helped create a decline in gold prices from $1,669/oz on average in 2012 to $1,293/oz on average in the first quarter of 2014. ETF holdings of gold have remained relatively flat throughout the year so far. Price forecasting is challenging as changes in investment demand are driven by perceptions of currency, inflation and geopolitical risk. China and India Balance Demand China and India combine to make up about half of global bar, coin and jewelry demand. The combination of falling prices and rising incomes has spurred demand in China, as it eclipsed India as the world leader in physical gold consumption...
