The leading macro-economic drivers of future gold demand, according to the Council’s recent Gold Demand Trends report, are that prevailing global socio-economic conditions will continue to drive investment demand for gold. These include continued uncertainty over the U.S. economy and the dollar, ongoing European debt concerns, global inflationary pressures and continued tensions in the Middle East and North Africa.The official sector - basically, central banks - is also expected to be a net purchaser this year.
Private consumption is another leading driver, according to WGS, which points to Chinese and Indian jewelry demand will underpin growth in the jewelry sector throughout 2011. “Strong demand in India during the recent Akshaya Tritiya festival and the beginning of the wedding season, alongside extensive purchasing on dips in the gold price, underlines the strength of the Indian market.”
Given the strength of demand, a bearr market isn't in the cards and won't be until the long-term fundamentals turn 180 degrees. Since this reversal means high real interest rates, it won't be happening anytime soon. Investment demand, although influenced by momentum buying, is fairly long-term. A fall in ETF demand didn't affect gold much because ETF purchases were more than made up for by physical demand.