Worldwide gold demand in 2012 was another record high of $236.4 billion in the World Gold Council’s latest report. This was up 6% in value terms in the fourth quarter to $66.2 billion, the highest fourth quarter on record. Global gold demand in the fourth quarter of 2012 was up 4% to 1,195.9 tonnes.

Central bank buying for 2012 rose by 17% over 2011 to some 534.6 tonnes. As far as central bank gold buying, this was the highest level since 1964. Central bank purchases stood at 145 tonnes in the fourth quarter. That is up 9% from the fourth quarter of 2011, and the eighth consecutive quarter in which central banks were net purchasers of gold.

The World Gold Council said:

Central banks’ move from net sellers of gold, to net buyers that we have seen in recent years, has continued apace. The official sector purchases across the world are now at their highest level for almost half a century.

If you want to know why Silver Wheaton Corp. (NYSE: SLW) is changing its mix to gold and silver, now you know. Investors of the SPDR Gold Shares (NYSEMKT: GLD) and ETFS Physical Swiss Gold Shares (NYSEMKT: SGOL) will want to pay attention to lower gold demand. There were some interesting observations:

While Indian full year demand was down 12% on the previous year, the fourth quarter jump of 41% to 261.9 tonnes saved the day as jewelry and investment demand hit a six-quarter high. Demand for jewelry was up 35% to reach 153.0 tonnes, and strong retail demand led to 108.9 tonnes of investment buying.

Chinese demand was flat due to the economic slowdown, but the slowdown there was said to be shorter than expected. Total demand was up 1% in the fourth quarter to 202.5 tonnes. Jewelry demand was up 1% to 137.0 tonnes in the fourth quarter, and investment demand was up 2% to 65.5 tonnes.

The fourth-quarter 2012 average gold price reached a record level of $1,721.8 an oz., up 1% on the previous record average price in the third quarter of 2011. The fourth-quarter 2012 supply of gold from mines was up 2% year-on-year, while recycling was down 5% against the same period.

Investment demand (the sum of ETFs and total bar and coin demand) was 424.7 tonnes, down 8% compared to the same quarter last year, but was 19% above the five-year quarterly average. Demand for ETFs and similar products in the fourth quarter was down by 16% on the corresponding quarter in 2011 to 88.1 tonnes, but was up by 51% on the full year.

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