ConsolidationCompanies have slowed down their deal activities...

Consolidation

Companies have slowed down their deal activities since last year, but Chinese gold miners remained active on the acquisition front. To capitalize on the strong domestic demand for gold, Chinese companies are acquiring overseas gold mines. In 2012, China’s second largest producer, Zijin Mining Group, bought Australia-based Norton Gold Fields and the third largest gold producer, Shandong Gold Group, acquired majority stake in Australia’s Focus Minerals.

Australia was a preferred target considering it is the world's second-largest gold producer, after China. Hong Kong-listed Kingwell Group Limited recently made an offer to Canada-based Brazilian Gold Corporation to acquire not less than 50.95% of its share. Brazilian Gold focuses on the acquisition, exploration and development of gold properties located in northern Brazil.

To Sum Up

Demand for gold will undoubtedly continue to rise, thanks to the rising middle class in India, China, Latin America and other emerging markets. The Euro-zone debt crisis will also be an important driver for gold demand. Furthermore, demand for gold bullion and coins is currently at an unprecedented level. It may however take months for this new demand to feed into prices, but prices will eventually stabilize.


LONDON, July 25 (Reuters) - China's gold demand could hit a record 1,000 tonnes this year, the World Gold Council said on Thursday, which means it would overtake India as the world's biggest bullion consumer.

Chinese gold demand is likely to be in the region of 950 to 1,000 tonnes in 2013, the WGC's managing director for investment, Marcus Grubb, said, but risks are skewed to the upside and could push demand past the upper end of that range.

"China will probably be the world's biggest gold consumer this year for the first time on an annual basis," Grubb said. "That will be driven by both jewellery and investment demand. Jewellery will be the biggest overall demand segment, but investment will grow fastest."

Physical deliveries from the Shanghai Gold Exchange in the first half of 2013 exceeded total deliveries for all of last year, exchange data showed, while premiums over spot prices rose above $20 an ounce.

China's demand for gold in fabrication, which covers jewellery and other decorative and industrial uses, amounted to 590.5 tonnes last year, according to metals consultancy Thomson Reuters GFMS.

India's gold demand is likely to be at the lower end of earlier guidance, Grubb said, at around 850 tonnes. The Indian government has moved to curb gold imports this year in a bid to cut a record trade deficit.

The Reserve Bank of India said on Monday that 20 percent of all gold imports must be used for exports, up from less than 10 percent currently.

Grubb forecast global central bank gold acquisitions this year at around 400 tonnes, down from a 48-year high of 532 tonnes in 2012. He described mine supply as "a wild card" and said scrap supply was expected to decline by 300-400 tonnes from 1,616 tonnes last year.

He expected jewellery to account for a larger slice of world gold demand this year as investment in the metal drops.

Investor selling on expectations that the Federal Reserve is set to rein in its gold-friendly quantitative easing policy in the near future has been blamed for a more than 20 percent drop in gold prices this year.

"Jewellery demand is likely to increase globally this year as a proportion of overall gold demand for the first time in 12 years," Grubb said. (Reporting by Jan Harvey; editing by Jane Baird)