Global gold demand soars as inflows to gold ETFs hit seven-year high
Demand for gold jewellery falls 19 per cent
Global gold demand jumped 21 per cent year on year in the first quarter the year as inflows to gold exchange traded funds (ETFs) hit a seven-year high amid a rise in risk-averse sentiment, a report by the World Gold Council said on Thursday.
The worldwide demand for gold reached 1,290 tonnes in the first three months of the year, mainly driven by a 122 per cent year-on-year surge in investment demand – for ETFs and gold bars or coins – to 618 tonnes, the report said.
Spurred on by the uncertainty raised by negative interest rates [in Europe and Japan], the investment sector was the dominant driver
Inflows to gold ETFs totalled 364 tonnes, the most in a quarter since the beginning of 2009, compared with just 25.6 tonnes in the first quarter of last year. The inflows more than reversed the cumulative outflows of the past two years, the report said.
“Spurred on by the uncertainty raised by negative interest rates [in Europe and Japan], the investment sector was the dominant driver , helping to push prices up 17 per cent over the course of the quarter,” Alistair Hewitt, the council’s head of market intelligence, said. The supply of gold, meanwhile, rose only 5 per cent.
Beijing’s devaluation of the yuan in August fuelled fears over mainland China’s economic health and the potential impact on global growth. The pace of US interest rate rises was now widely expected to slow, also undermining confidence in traditional asset classes, the report said.