Developing countries' demand causing surge in gold price

THE SHARP rise in the gold price in recent weeks was caused by soaring demand in developing countries during the first quarter, according to the World Gold Council.

The council, which is financed by gold producers, said demand was up 24 per cent in the markets it monitors, which account for about 75 per cent of world demand. The driving force behind the rise was a 36 per cent growth in demand from developing countries.

The figures confirmed that George Soros, the international investor who made a well publicised foray into gold mining shares last month, spotted a trend that was already well under way but had not been widely appreciated in the market. The gold price rose after news of Mr Soros's interest.

Roger Murphy, of the WGC, said: 'Soros in effect acted as a catalyst. I expected the rise, but it came quicker than I had expected.'

Keen buyers included mainland Chinese, who are increasingly buying pure gold jewellery as they become more prosperous - 95 tonnes in the first quarter compared with 70 tonnes a year earlier.

The enthusiasm for gold throughout Asia offset falling demand in the recession- hit industrial countries.

The WGC refused to predict a continuation of the first quarter trend throughout 1993. But it expected world demand to exceed last year's 3,000 tonnes.

Gold closed last night dollars 1 lower at dollars 355.