Print this article
Uncertain Times Drive Global Gold Demand - Industry Data
Tom Burroughes
13 May 2016
Global demand for gold surged 21 per cent in the first three months of this year from the same quarter of 2015, reaching 1,290 tonnes, the second-largest quarterly figure on record, according to industry data. The rise, according to the , the Swiss private bank, told this publication that it was looking at raising gold exposures but was waiting for circumstances to justify such a move. In February this year, Australia-headquartered Allocated Bullion Exchange held a soft launch of what it says is the world’s first global institutional electronic exchange for allocated physical precious metals, part of a trend in pushing transactions into the digital sphere. The full launch is expected in the third quarter of 2016. The firm said it broke fresh ground by offering the full trade cycle in terms of market participants (producers, traders, jewellers and others) and the offering of services from price discovery, trading facilities to storage and delivery. In May last year, among other industry developments, Gold Bullion International, a precious metals provider to investors and wealth managers, appointed Jammy Chan as head of business development for Asia to spearhead its expansion into China. ETFs “Gold found favour as a risk diversifier due to the negative interest rate environment in Europe and Japan, combined with uncertainty over the Chinese economy, anticipation of slower interest rate rises in the US and global stock market turmoil,” the WGC said. Total bar and coin demand was 254 tonnes, marginally higher than the same period last year, it continued. The report said weakness in price-sensitive markets was offset by strength elsewhere with 5 per cent growth in China (62 tonnes) and strong demand in the US and the UK, which grew by 55 per cent and 61 per cent respectively. In total, investment demand was 618 tonnes, up 122 per cent from 278 tonnes in the same period last year, igniting a rally in the gold price which appreciated by 17 per cent in dollar terms during the quarter.
Asia has been a region that, for reasons at times linked to distrust of paper money and a relatively short history of central banking, has had a strong affinity with gold for investment, as well as money, purposes.
The WGC said that inflows to exchange traded funds totalled 364 tonnes during the quarter, the highest quarterly level since Q1 2009, from 26 tonnes in Q1 2015.