Global demand for gold jumped 38 per cent year-over-year to 1,015.5 tonnes in the first quarter as sharply higher buying in gold investment products more than offset depressed jewelry consumption and industrial usage, according to an industry report released on today.
"In the current market circumstances, I am not surprised by any increase in gold investment," George Milling-Stanley, managing director of the World Gold Council (WGC), said prior to release of its quarterly ‘Gold Demand Trends’ report.
Milling-Stanley said gold benefited from a combination of safe-haven buying, inflation-hedge demand and diversification into gold to reduce overall volatility of investment portfolios amid one of the worst financial crises in history.
"We have also seen a move from capital appreciation toward wealth preservation," he said. The WGC is a trade group funded by the gold mining industry to promote the metal.
Identifiable investment, which includes the popular gold exchange-traded funds (ETFs) and bullion coins, rose to 595.9 tonnes for the quarter, more than triple that of the 171.3 tonnes in the year-ago quarter.
ETFs were the biggest contributor to investment inflows for the first quarter, while bar and coin demand was the main driver in the last two quarters of 2008, the report showed.
Bullion holdings of SPDR Gold Trust, commonly known as GLD among traders, rose nearly 350 tonnes, or 50 per cent, to 1,127.44 tonnes by the end of the first quarter.
GLD is by far the world's biggest gold-backed ETF, accounting for more than 80 percent of all such investment funds.
"It is not a case of ETF demand replacing other gold investments, but it has been genuinely additive to gold investment," Milling-Stanley said.
Total jewellery consumption in the first quarter dropped 24 percent to 339.4 tonnes year-on-year, dampened by higher gold prices and the global economic slowdown, WGC said.
Reuters