Demand for gold plunges around the world (vi)

According to the World Gold Council the world gold demand shrank by 5% in quarter one of the current year versus January to March of 2011 data.

The decline of jewelry sales by 6% and the decline of gold purchases by central banks by 41% can be named as the main reasons for that.

The demand decline is actually stemming from the gold prices upturn.

The average price for the first three months of the year advances by 22% as compared to the first quarter of 2011.

Moreover, one of the factors which caused a decline is the decrease of gold importing tax in India that is the largest consumer of this metal. In the 1st quarter the demand for gold fell by 19% year on year and amounted to 207 ton.

In the 4th quarter of 2011 the index was equal to 176 metric tons. The worries pertaining to the Eurozone debt crisis were supporting the investors� refrain from the metal, who preferred the American dollar instead.

This year we can see the increase of the correlation between gold and the U.S. dollar which presupposes that with the further dollar appreciation gold will continue the downfall.

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