26-8-10Gold demand reached 1,050.3 metric tons in the second...

26-8-10

Gold demand reached 1,050.3 metric tons in the second quarter, 36% higher than the same quarter in 2009, mostly thanks to soaring investment demand, a report from the World Gold Council showed early Wednesday.

Economic uncertainties around the world are expected to provide continued support for gold, said the council, an industry group backed by leading gold mining companies.

These concerns led investors to gobble up gold in the second quarter, the World Gold Council said. Demand for gold-backed exchange-traded funds rose 414% compared to the second quarter of 2009. Retail investment demand rose 29% in the same period.

Investors are making the switch from buying gold only in times of crisis to having gold as part of a diversified portfolio, said Jason Toussaint, a managing director for the World Gold Council.

"Gold is the ultimate diversifier," he said. "Correlation to U.S. equities is zero" in addition to its proven ability to not only hold value in times of crisis but increase.