Gold demand jumps amid global turmoil
DEMAND for gold soared in the second quarter as investors sheltered from global turmoil including Brexit, the World Gold Council (WGC) said.
Total gold demand stood at 1050 tonnes in April-June period, an increase of 15 percent compared with the second quarter of 2015.
That took first-half demand to 2335 tonnes – which was the secondhighest level for that period and not far from the record 2371.5 tonnes seen in 2013.
“Investors sought risk diversification and a safe store of value in the face of continued political, economic and social instability,” WGC added.
Investment demand surged 141pc to 448 tonnes in the second quarter.
Jewellery demand sank 14pc to 444 tonnes – with heavy falls in key markets China and India – and central bank purchases also slid.
But over the course of the first half, investment demand leapt to a record 1064 tonnes, stimulated by soaring prices.
Gold is widely regarded as a safe store of value by investors, in times of heightened geopolitical and economic turmoil.
Prices jumped by about one quarter in value during the first half.
“A number of factors turned the attention of the Western investor community towards gold in the opening months of the year – and brought it even more sharply into focus in the second quarter,” the WGC said.
“Global monetary policy remained front and centre. Negative interest rate policies in Japan and Europe, combined with expectations of a slowdown in the cycle of US rate hikes, underpinned investors’ gold-positive sentiment.”
At the same time, however, high prices contributed towards “lacklustre” consumer purchasing, particularly in price-sensitive markets.
“The global picture for gold is dominated by considerable and continued investment demand driven by the West as investors rebalance their investments in response to the everexpanding pool of negative yielding government bonds and heightened political and economic uncertainty,” added Alistair Hewitt, WGC head of market intelligence.
Demand for gold has surged.