New data from the World Gold Council confirms what has been abundantly clear to wealth managers and their clients in recent years – demand for the yellow metal and its associated investment products is near or at record highs, fuelled by factors such as Asian spending and changed central bank policy.

Gold demand in 2010 reached a 10-year high with annual demand of 3,812.2 tonnes worth around $150 billion, producing a record price of $1,421 per ounce on the London afternoon fix on 9 November.

In the jewellery sector, annual demand was 17 per cent higher than in 2009, with strong demand coming from China and India. Concerns about the global economic recovery, rising inflation, geopolitical tensions – such as those seen in Egypt, Libya and the Gulf – have helped drive gold to new heights. The financial panic of 2008 has also reignited interest in the idea of re-establishing traditional links between precious metals to currencies. (To view an article on the matter, click here.)

Last year, central banks became net buyers of gold for the first time in 21 years, removing a significant source of supply to the market, the WGC report said.

Investment demand, however, fell slightly (-2 per cent) compared with 2009, but was the second highest year on record at 1,333 tonnes, which equated to $52 billion, it said.

“Investment demand for gold as a foundation asset in portfolios is likely to remain strong, fuelled by ongoing uncertainty surrounding global economic recovery and fiscal imbalances, as well as fear of impending inflationary pressures and currency tensions,” the report said.