Gold demand strong in 2011, says World Gold Council

Investment demand above 300 tonnes a quarter is considered high

Demand for gold as an investment was strong at the start of 2011, although it was off the peaks of 2010, the World Gold Council has said.

Investment demand was 310.5 tonnes, up 26% from the first quarter of 2010 but down 5% from the fourth quarter.

Demand for gold peaked in the second quarter of 2010, partly due to Europe's sovereign debt crisis.

The gold price has risen almost 50% in the past 18 months, and is currently at just below $1,500 an ounce.

Gold is traditionally treated as a haven during times of economic uncertainty.

There was investment demand for 572.6 tonnes between April and June 2010.

"Although demand is still down from the second quarter, it is still at historically high levels," said Philip Newman, research director at the precious metals consultancy GFMS.

"Although there have been knee-jerk reactions when there is a concentration of news, in general since the collapse of Lehman Brothers people have been coming out of other commodities and into gold."

Investment demand of about 300 tonnes a quarter is considered to be a relatively high figure.

Demand for gold for other uses such as jewellery and technology has been relatively flat, except for dental demand, which has fallen as a result of higher prices.