2011 Market Review & Yearly Summary [Gold & Other Precious Metals]

Gold prices started of strong at the very beginning of 2011 as the global financial meltdown grew into epic proportions, starting off at 1,356 dollars an ounce in January 2011, gold prices kept a steady pace forward until the last quarter of 2011 when it took a dive from 1770 dollars an ounce in September 2011 to 1665 dollars an ounce in October before recovering in November at 1738 dollars per ounce the falling off again to an even lower level of 1641 in December of 2011. Regardless gold had seen a difference of close to 300 dollars within 12 months making it one of the most volatile commodities for the year, but still safe as it maintained a value of above 1600 dollars per ounce in general.

The reason for gold prices rallying was further fuelled by the fact that investment demand was going while the jewellery and manufacturing sectors maintained a steady pace despite increasing prices. Mine production had also increased in 2011 as mining companies tried to capitalise on the high prices of gold while recycling declined. The total demand for gold (including demand from central banks) amounted to 4,067 tonnes in 2011 which was significant given the slow recovering economies of the world at that time.

Gold’s primary appeal as an inflation hedge allowed the precious metal to perform out of the ordinary bounds that it is commonly subjected to. Although the economies were recovering confidence in paper currency was still generally low making the bright yellow shiny metal much more appealing. The final boost for gold came from central banks of big economies who were aggressively seeking to increase their gold reserves, this included, China, Russia and as well as India which was already the biggest gold consumer on the planet due to the huge demand for gold jewellery in the country.