LONDON, Aug 15, 2007 (AFP) - Global demand for gold surged to record highs in the second quarter of 2007, driven by increased jewellery purchases in China and India, a leading industry body said on Wednesday, August 16th.

Photo : Jung Yeon-Je/AFP

Gold demand, in terms of total dollar value and tonnage, also gained from higher purchases of the metal by industry and wealthy individuals during the three months ended June 30, the World Gold Council said in its latest quarterly report.

"Dollar demand for gold in the jewellery, retail investment and industrial sectors all reached new heights in the second quarter of 2007" compared with the same period in 2006, the WGC said in its report.

"Global demand for gold jewellery showed the strongest surge, reaching a record 14.5 billion dollars (10.8 billion euros), 37 percent higher than the second quarter of 2006, with particular strength across the key gold markets of Greater China, India, the Middle East and Turkey," it added.

Overall gold demand rose to 19.8 billion dollars -- a 27 percent increase on the second quarter in 2006. In terms of weight, demand climbed 19 percent to 922 tonnes.

India, the world's largest gold market, registered record high demand measured by tonnage in both jewellery and retail investment.

Turkey also achieved second-quarter records for both categories while Russia recorded its highest ever level of jewellery demand, the WGC said.

"We are pleased to report a very strong second quarter with demand for gold reaching unprecedented levels in a number of markets," said James Burton, chief executive of the World Gold Council.

"A reduction in price volatility in 2007 has resulted in increased consumer confidence and, coupled with greater industry marketing activity, led to record levels of gold jewellery purchases globally in dollar terms.

"I am pleased to note that the dollar value of gold demand has more than doubled in just four years," he added.

In Wednesday trading on the London Bullion Market, the price of gold fell to 667.35 dollars per ounce at the morning fixing, from 668.35 dollars late on Tuesday.

The World Gold Council describes itself as an association of global gold mining companies devoted to the promotion of the metal. Its latest figures were compiled by the precious metals consultancy GFMS.