Friday 6 December 2019

Global demand for gold grows 16pc

Emma Wall

GOLD demand grew 16pc over the past 12 months, with $59.7bn spent globally on the precious metal.

The figure was boosted by China upping their investment by 10pc in a bid to hedge inflation. Gold demand globally hit 1,098 tonnes in the first three months of the year, 5pc off the record high, but a significant increase on the same period in 2011.

The World Gold Council’s Gold Demand Trends report cited increased investment into the precious metal in China, as investor's continue to hedge against feared inflation. Jewellery demand in China also increased to 156.6 tonnes – 30pc of the global appetite. This increase places China as the largest jewellery market for the third consecutive quarter.

Central banks across developed and emerging markets purchased 80.8 tonnes of gold in the first three months of the year, at an average price of $1,691, 22pc more expensive than in a year ago.

Retail and institutional investors buying exchange traded funds (ETFs) accounted for 51.4 tonnes of gold purchased in the three months to the end of March, at a total value of $2.4bn. The World Gold Council stated that this movement was in stark contrast to the first quarter of 2011, when the ETF sector witnessed net outflows.

The only market to experience a downturn in gold demand was India, as high gold prices and the introduction of import taxed curbed appetites. Jewellery demand in the region fell 19pc and investment demand fell a considerable 46pc.

Marcus Grubb, from the World Gold Council said, “China and India have seen continuing economic growth and whilst China’s economy is expected to slow, it will nonetheless surpass the rates of growth in the West. As we previously forecast it is likely China will become the largest source of demand for gold in 2012.

"This growth story also extends to other emerging market economies and is reinforced by central banks’ continued buying of gold, as a diversifier and a preserver of national wealth. The current picture of the gold market is diverse and not withstanding a flight into US dollars and treasuries near term, we believe the fundamental reasons for investing in gold today remain very strong and compelling.”

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