Chart: Which countries are falling behind in gold mine production
India tops the global ranking with demand nearly 50 times that of its mined supply.
The gold price enjoyed strong gains on Tuesday, after new US Federal Reserve chair Janet Yellen voiced strong support for the central bank’s economic stimulus program.
On the Comex division of the New York Mercantile Exchange, gold futures for April delivery – the most active contract – last traded at $1,290.60 an ounce, up nearly $16 from yesterday’s close after rising steadily throughout the trading day.
Gold hit an intra-day high of $1,294.40 shortly before lunchtime and traders point out that breaching technical hurdles at $1,292 and $1,308, could trigger a series of gains.
Yellen told lawmmakers she expects “a great deal of continuity” in the Fed’s approach to monetary policy, but left the door open to pause the tapering of $65 billion a month asset purchases under its quantitative easing program should the economic outlook deteriorate.
Yellen was one of the chief architects of the stimulus program that is tied to the US unemployment rate, and two disappointing jobs reports in December and January have strengthened the hands of the doves on the Federal Open Market Committee.
The US has not been alone in printing money and together with the Bank of Japan, the European Central Bank and the Bank of England, more than $10 trillion is now sloshing around in the system.
Monetary expansion, particularly since the financial crisis, has been a massive boon for the gold price. Gold was trading around $830 an ounce when previous chairman Ben Bernanke announced Q1 in November 2008.
Gold and the US dollar usually moves in the opposite directions and gold’s perceived status as a hedge against inflation is also burnished when central banks flood markets with money.
The price of gold slid close to 28% in 2013 – the worst annual performance since 1980 – in anticipation of an end to the ultra-loose monetary policy.
But the metal’s perceived value as a safe have in time of turmoil and strong physical demand from Asia has seen gold gain 6% so far this year.
China consumed 1,176 tonnes of gold in 2013, 41% higher than in 2012, according to data released on Monday by the China Gold Association.
Despite onerous new taxes and import restrictions Indian consumption still rose 5% to 987.2 tonnes last year and the two countries together represent more than 50% of world demand.
