Jewellery demand rose by 8% y/y in Q3 10 to 101.3 tonnes, while investment demand rose by 68% y/y to 45.1 tonnes.

The spot gold price is up marginally on a day to day basis by 0.01% at 1385. (ENspreads 13:54 GMT).

The forward month silver price is once again outperforming the gold price and is 0.58% up on yesterday at 28.55.

Latest data from Barclays Capital would suggest that the gold price is being driven to a significant degree by a Chinese market that is starting to see gold as an investment vehicle.

"Demand in Q3 10 rose by a healthy 22% y/y, but perhaps more noteworthy has been the shift in the pace of buying of different forms of gold. Investment demand growth has accelerated, albeit from a low base in comparison with the more steady growth in jewellery consumption.," says Suki Cooper at Barclays Capital.

Jewellery demand rose by 8% y/y in Q3 10 to 101.3 tonnes, while investment demand rose by 68% y/y to 45.1 tonnes. China continues to deregulate its domestic gold market and this summer outlined the next steps in that process.

Yesterday saw a steep 1.4% drop amid widespread liquidation in precious metals.

The price of gold declined $41.62, or 2.9% in the past two days, its worst two-day decline since February 3-4 of this year. Since reaching a new all-time record high of $1,432 earlier this week, the gold price is now on pace for its worst week since a 3% slide in mid-October.

The abrupt decline in the gold price has paled in comparison to the drop in the silver price, which fell $1.41, or 4.7%, yesterday to $28.35 per ounce. The price of silver has now lost $2.39, or 7.8%, from its 30-year high of $30.75 reached on December 6. In spite of this sell-off, however, the gold price and silver price remain higher year-to-date by 26.2% and 68.3%, respectively.

Source: http://www.economy-news.co.uk/gold-prices-09201012-2.html