Asian economies 'hunger for gold'

Asian economies 'hunger for gold'

NEW DELHI (Reuters): Demand for gold in the crisis-racked
Asian economies is reviving, a senior World Gold Council (WGC)
official said on Tuesday.

"There is evidence that the demand is now coming back to
Southeast Asia," Dick Ware of the WGC's Centre for Public Policy
Studies told Reuters.

"Their economies are starting to mend again and given the
propensity of demand for gold in these countries -- and it was
proved that they could use it last year -- I expect demand to
grow again," Ware said on the fringes of a conference organized
by the Geneva-based World Economic Forum (WEF).

Ware said when the Asian crisis struck last year those who
owned gold were fortunate. Koreans and Thais sold gold, finding
it to be an asset when currencies were collapsing.

"What you see in the current quarter, and I expect that to
continue, is repurchasing of gold," Ware said.

"People used their gold last year and early this year when
they were in distress. They have seen how valuable it is and now
want to rebuild their stocks."

Referring to gold demand in Japan, Ware said the council saw
the country as a mature market that was unlikely to see any
significant changes.

Gold demand in China, which was still a controlled economy,
was increasing in the short term but he did say by how much. "But
it has to be on a rising trend."

China's gold industry was going through a progressive
deregulation and the government had dramatically modified pricing
arrangements.

He said China would deregulate the industry over the long run
and per capita consumption would grow.

"India last year consumed about 740 tons of gold, China
consumed 220 tons of gold. If the Chinese consume gold at the
Indian rate, then you are talking of additional demand of five,
six or seven hundred tonnes for the long term."

India, which imports almost all its gold, strengthened its
position as the world's largest consuming country in 1997 with
demand surging 45 percent to an all-time high of 737 tons, WGC
data shows.

Gold prices firmed during early European trade on Tuesday as
the effects of Monday's fund-led sell-off in New York faded,
dealers said.

London gold fixed at $293.35 a troy ounce in the morning, down
on Monday afternoon's $294.70 but above the late U.S. lows
underneath $292.00.

Spot prices held steady through overnight trade in Asia before
nudging higher again in Europe.

Spot gold was last at $293.15/$293.55, 45 cents up on its
previous New York close.

Silver was also higher at $4.87/$4.89, up two cents on New
York, platinum was last $3.00 down at $350.00/$352.00.

Palladium was up $1.00 at $271.00/$276.00.

"We are still tending to be slightly positive on gold," said one
London dealer.