Gold demand surges 21% in Q1 2016: WGC

The Dollar Business Bureau

Global gold demand has increased 21 percent to 1,290 tonnes in the first quarter of 2016, up from 1,070 tonnes during the same period last year, a World Gold Council (WGC) report said.

“This rise in demand was driven by vast inflows into ETFs (exchange-traded funds), fuelled by the concerns of investors with regard to economic instability and an uncertain financial landscape,” the report said.

The global demand for jewellery was earlier down by 19 percent due to higher prices and subdued industrial action in India. A softening of the Chinese economy further meant that many consumers have delayed the purchases.

“Two main themes appeared in the first quarter of this year. Driven by the ambiguity raised by negative rates of interest, the investment sector was the leading driver of demand for gold, pushing the prices to go up by 17 percent during the quarter, as ETF inflows increased,” said, Alistair Hewitt, Head of Market Intelligence at the WGC.

Hewitt said jewellery demand had been through a difficult quarter due to a continuous lack of consumer confidence, weakening Chinese economy and 42-day jewellers’ strike in India.

“Looking forward, we anticipate that continuing uncertainty in the market and unusual monetary policies will continue to help investment as well as central bank demand. This, along with the likely recovery of India’s economy, should witness that the demand for gold stay healthy during the current year,” Hewitt added.

According to the report, the Central Banks continued to be strong buyers, purchasing 109 tonnes in the quarter. This represents the 21st consecutive quarter when Central Banks have been the net purchasers of gold. They continue to diversify away from the US dollar.

The total demand for gold was 736 tonnes, down 13 percent in the first quarter of current year, from 849 tonnes in the same period of 2015.