The liberalisation of Asia’s financial system and the growing wealth of its populations are expected to boost demand for gold and push the price of the key commodity over $US2400 an ounce by 2030, ANZ predicts.
In a report titled East to El Dorado: Asia and the future of gold, released on Wednesday, ANZ said Asian gold demand would develop steadily as the emerging region’s consumption patterns began to more closely resemble those of developed nations.
The bank estimated annual retail and investor demand for the precious metal in the 10 largest economies in Asia, which it dubbed “the A10” – China, India, Indonesia, Japan, South Korea, Malaysia, the Philippines, Singapore, Thailand and Vietnam – could double to 5000 tonnes within 15 years.
ANZ chief economist Warren Hogan told Fairfax Media several fundamental economic arguments detailed in the report strongly refuted claims the gold price was on a downward trajectory.
Mr Hogan said increasingly higher incomes in the A10 would mean more gold jewellery would be purchased, noting that China would form the backbone of gold demand going forward. Despite total demand having risen significantly in recent years, on a per capita basis, China remained well behind most developed markets.
In 2012, China and India consumed about 0.8 grams of gold per person. As regional GDP per capita expanded, per capita gold demand could rise to as much as 1.2 grams, a figure more in line with Germany, Canada and the United States, the report said.
The gold holdings of a growing number of institutional investors would also increase as financial systems were liberalised and serviced by a larger body of professional money managers, Mr Hogan said, and regional central banks would continue to increase their gold reserves to provide confidence in newly floated currencies.
“This will all support a significant increase in the price … but the argument about gold as an investment is such an important element of all of this,” Mr Hogan said.
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