New Delhi: Global gold demand grew to 1,053.3 tonnes in the first quarter of 2019, up by seven percent as compared to the last corresponding period, the World Gold Council (WGC) said on Thursday.
The increase was largely due to continued growth in central bank buying as well as growth in gold-backed exchange traded funds (ETFs), WGC said in its latest report on gold demand trends.
India’s demand for gold jewelry hit a four-year high during January to March.
“A lower local rupee gold price in late February and early March coincided with the traditional gold buying wedding season, lifting jewelry demand to 125.4 tonnes, a 5 percent increase on the same period last year and the highest Q1 since 2015.”
This helped the overall gold demand for jewelry at global level inch nearly one percent higher to 530.3 tonnes despite a two percent decline in China’s demand for gold jewelry estimated at 184.1 tonnes, said WGC.
Central banks bought 145.5 tonnes of gold in Q1, up 68 percent as compared to the corresponding period in 2018 and representing the strongest start to a year since 2013. Diversification and a desire for safe, liquid assets were again the main drivers of the purchases.
On a rolling four-quarter basis, gold buying reached a record high for our series of 715.7 tonnes, said the WGC.
ETFs and similar products added 40.3 tonnes in Q1, up 49 percent on last year. Funds listed in the United States and Europe benefitted from the largest inflows, although the former was more erratic while the latter was underpinned by continued geopolitical instability.
Bar and coin investment softened slightly, down one percent to 257.8 tonnes. This was purely due to a fall in demand for gold bars, as official gold coin buying grew 12 percent to 56.1 tonnes. China and Japan were the main contributors to the decline.
In Japan, net investment turned negative on profit-taking following a surge in the local price in
Gold used in applications such as electronics, wireless and LED lighting fell three percent to 79.3 tonnes. Trade frictions, sluggish sales of consumer electronics and global economic headwinds hit the technology sector.
“The beginning of 2019 saw a sharp recovery in investor sentiment in both the equity and debt markets, but an appetite for gold remained solid,” said Alistair Hewitt, WGC’s Head of Market Intelligence.
The total supply of gold was largely unchanged in Q1 at 1,150 tonnes. Modest growth in mine production and recycling was offset by a decline in net hedging.
Mine production and recycling levels saw small increases compared with Q1 2018, rising to 852.4 tonnes and 287.6 tonnes, said WGC in a statement.