Pension funds and global central banks will ensure gold remains a "robust" market in 2010 as they invest in the metal as part of their wealth preservation strategies, the World Gold Council said on Wednesday.

"Last year we saw a very noticeable switch of pension funds to holding gold for the first time," Aram Shishmanian, the CEO of the council, told Reuters Insider Television on the sidelines of a forum organized by the Adam Smith Institute in Moscow.

"Gold is becoming an assets class. So we are seeing a structural shift towards gold as an enduring part of investment portfolios," he added.   

"That is a lesson that many investors have learnt over the past few years. You have to both look at risky assets which is wealth creation but also have a bedrock for wealth preservation," he added.

Global gold demand dropped 11 percent in 2009 on weaker industrial and jewellery demand, but investors' appetite for  bullion is likely to remain strong this year, the World Gold Council said on Wednesday.
   
Shishmanian said although some countries could sell gold from their reserves to cover budget deficits the trend was unlikely to be big to damage the market.

"There may be a few countries (selling gold to cover budget deficits) but overall they will be net buyers," he said.

"And the reason they are net buyers is because they are reconsidering their reserves policies and will be buying gold to protect their national interests," he said.

The WGC does not forecast gold prices for 2010. Shishmanian said he believed the market will be "robust" because the underlying economics were strong, the overall supply was decreasing and new sources of gold were falling too.

"China today is the largest producer. Then South Africa but their reserves are depleting," he said.   

He said Russia and its neighbours were investing a lot in new exploration but Moscow was still not attracting sufficient foreign investment. - Reuters