The World Gold Council (WGC) has said that global gold demand surged 34 percent in the first quarter of 2022, driven by strong exchange-traded fund (ETF) inflows, as investors boosted their investments in safe-haven assets amid heightened geopolitical and economic uncertainty.
Gold demand in the three months to the end of March jumped to 1,234 tonnes – the highest since the fourth quarter of 2018 and 19 per cent above the five-year average of 1,039 tonnes – as investors sought a safe haven in view of the Ukraine conflict and inflationary pressures, the trade body said in a report.
“The first quarter of 2022 has been a turbulent one, marked by geopolitical crises, supply chain difficulties and surging inflation,” said Louise Street, senior analyst, Europe, Middle East and Africa, at the World Gold Council.
“These global events and market conditions have solidified gold’s status as a safe-haven holding, not just for investors, but also for retail consumers thanks to its unique position as a dual-natured asset class.”
The price of gold briefly touched $2,070 per ounce in March as investors boosted their investments in the precious metal. The average US-dollar gold price in the first quarter was 5 percent higher both on a quarterly and an annual basis, the report said. Gold ETFs had their strongest quarterly inflows of 269 tonnes since the third quarter of 2020 in the first three months of this year, more than reversing the 174 tonnes annual net outflow from 2021, according to the report.
Meanwhile, demand for gold bars and coins during the quarter was 20 percent lower at 282 tonnes compared with the first quarter of 2021, but 11 percent above its five-year quarterly average.
Gold jewellery demand also fell 7 percent year-on-year to 474 tonnes, largely due to softer demand in China and India, which together tend to generate between 55 percent to 60 percent of total quarterly jewellery consumption. Rising gold prices globally affected purchasing activity in India, while demand in China was hit due to Covid-19 movement restrictions, according to the report.
Central banks also boosted purchases of gold amid the global uncertainties. Net buying by central banks more than doubled from the previous quarter, adding over 84 tonnes to official gold reserves during the first quarter of 2022, with Egypt emerging as the biggest buyer. However, demand fell 29 per cent compared with the same quarter last year.
Demand for gold in technology rose 1 percent annually to hit a four-year high of 82 tonnes, the highest total for a first quarter since 2018, according to the report.
Total gold supply increased 4 percent on the year, driven by strong mine production, which hit 856 tonnes, the report said.