Metals & Mining Industry Outlook: Gold Demand and Prices Expected to Strengthen in 2011

Global gold demand saw a significant increase in the first quarter of 2011, with a total of 981.3 tons, up 11% year over year from 881.0 tons in the first quarter of 2010. This growth was driven by an improvement in jewelry demand in key markets, as well as a rise in demand for bars and coins. The quarterly average gold price hit a new record of $1,386.27/oz (London PM Fix), its eighth consecutive year-over-year increase.

Key Takeaways:

Global gold demand in the first quarter of 2011 totaled 981.3 tons, up 11% year over year from 881.0 tons in the first quarter of 2010.
The quarterly average gold price hit a new record of $1,386.27/oz (London PM Fix) in the first quarter of 2011, its eighth consecutive year-over-year increase.
Gold demand and prices are expected to strengthen in 2011, driven by growing demand in non-Western markets, particularly India and China.
Barrick Gold Corporation (NYSE: ABX), Agnico-Eagle (NYSE: AEM), and Goldcorp Inc. (NYSE: GG) are expected to benefit from higher gold prices, while Newmont Mining Corporation (NYSE: NEM) and Kinross Gold Corporation (NYSE: KGC) may struggle due to lower ore grades.
The stock prices of gold producers are not expected to benefit much from the favorable commodity-price backdrop, with a neutral view on the stocks.

Statistics:

Global gold demand in the first quarter of 2011: 981.3 tons
Year-over-year change in global gold demand: +11%
Quarterly average gold price (London PM Fix): $1,386.27/oz
Expected growth in gold demand in non-Western markets: India (45%-50% of global gold production) and China (expected to double demand in 10 years)
China's expected gold demand growth: +100% in 10 years
Gold price drop in January 2011: 7%
Gold price rise in February 2011: +x.x%

Sources:

Zacks Equity Research, http://www.zacks.com/stock/news/56261/Metals+%26amp%3B+Mining+Stock+Outlook+-+July+2011