Demand for gold up 5% this year

The demand for gold has surged by 5% year-on-year in 2019 thus far, according to new research data.  The just released Gold Demand Trends Q1 2019 report shows that in comparison with a three-year low in 2018, net purchases in the first three months of 2019 set a new six year high.

Purchases by central banks have been a key source of this demand, with global reserves having grown by 145.5t in this period. Quarterly inflows of gold-backed ETFs also increased, up 49% while demand for jewellery, which is strong in markets such as India, also contributed to the 5% year-on-year improvement.

The demand from central banks is notable as it represents the largest increase in gold reserves in six years. This flurry of buying has been prompted by a desire for safer, liquid assets, which of course gold provides. Additional data shows that the number of central banks buying gold has also increased, meaning more countries are shoring up their gold reserves. The increasing reserves are also concentrated in emerging markets rather than developing ones – what’s significant about this is that some analysis suggests it points to a desire to remove reliance on the dollar and reduce risk due to the gloomy global macroeconomic outlook.

The increase in demand for jewellery is also significant, up 1% overall for the quarter while ETF inflows especially in Europe were a reflection of the continued instability politically and socially in the region.