By  on February 25, 2008

Dollar demand for gold hit a record $79 billion in 2007 and identifiable gold demand jumped 4 percent to 3,547 tons, but demand in the fourth quarter slowed considerably, according to World Gold Council's Gold Demand Trends.

"High and volatile gold prices in recent months have meant we have now entered a period of challenging trading conditions in the gold market" said James Burton, chief executive officer of the World Gold Council, citing consumer demand for gold in jewelry and retail investment.

Identifiable retail demand fell 17 percent in the fourth quarter worldwide and 14 percent in the United States due to high prices and a weaker economy.

Inflows in the investment sector were still high at $8 billion. Net retail investments rose 2 percent, but in the fourth quarter dropped 39 percent to 67 tons. Overall identifiable dollar investment demand grew 15 percent from 2006 figures.

Industrial demand reached a record 465 tons in 2007, up 2 percent, and fourth-quarter demand was also up 2 percent at 77.4 tons.

Gold supply remained consistent throughout 2007, falling only 3 percent. Supply from the official sector rose due to higher Central Bank Gold Agreement sales, but was offset by increased dehedging by gold mining companies and lower scrap supplies.

Despite continued difficulty in retail predicted for early 2008, Burton adds "gold's desirability remains very strong and once prices stabilize we believe buyers will come back to the market. Investment demand is likely to remain robust in the early part of 2008 as long as the current financial and economic worries and dollar weakness continue."

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