Total gold demand increased by 1% year-on-year to 1 206 t – the highest for a first quarter since 2016, industry organisation the World Gold Council’s new report on gold demand trends for the first quarter shows.

The report points out that investment was the key driver of growth, with a sharp upsurge in gold exchange-traded fund (ETF) inflows and elevated bar and coin buying.

Inflows into global gold ETFs surged in the period. Demand of 226 t was the strongest for three years.

Investors across the globe bought gold as a refuge against the threat of trade wars, continued geopolitical strife and equity market turmoil, the council says.

Investment in gold bars and coins remained elevated at 325 t.

Central banks also continued to add gold to official reserves, albeit at a slightly slower pace, the report reveals.

Global central banks bought 244 t of gold in the period.

The report further shows that jewellery demand volumes fell as the gold price hit successive new highs; however, the value of demand increased.

Gold jewellery consumption dropped 21% year-on-year as record prices impacted on affordability.

Gold’s price momentum, however, attracted investor interest, which was cemented by the political and economic volatility roiling global markets, the council avers.

Meanwhile, total gold supply was 1% higher year-on-year as mine production improved to 856 t.

This was offset by a 1% decline in recycling as consumers held onto their gold hoping for higher prices, the council points out.

OUTLOOK
The World Gold Council sees continued momentum in gold ETF flows on risks of stagflation and recession, as well as ongoing geopolitical and trade tension.

It expects central bank buying to stay close to its recent yearly range for similar reasons.

Bar and coin investment is expected to remain firm, although some profit-taking may be tempted by surging prices, which will remain a hurdle for jewellery demand.

Conditions remain conducive to continued strength in mine production, while recycling is caught between higher prices and low near-market stocks, the council says.