RIYADH: Amid heightened market volatility and global uncertainty triggered by the Russian invasion of Ukraine, gold remains resilient with the first-quarter demand up 34 percent year-on-year, according to the World Gold Council’s Gold Demand Trends report.
The report revealed that gold continues to be a safe haven investment, which made gold bar and coin demand 11 percent above its five-year average at 282t.
The report added that gold ETFs had their strongest quarterly inflows of 269t since the third quarter of 2020, more than reversing the 173t annual net outflow from 2021.
The report, however, made it clear that renewed lockdowns in China and high prices in Turkey contributed to a 20 percent year-on-year decline, compared to the very strong first quarter of 2021.
The total gold supply globally increased 4 percent year-on-year, driven by strong mine production, which hit 856t. In addition, recycling rose 15 percent from the previous year, reaching 310t.
According to WGC, a fall in marriages and auspicious occasions in countries like India in the first quarter had a direct impact on gold purchasing. The report added that this crucial factor, along with rising prices, prompted many Indian consumers to hold back on their purchases.
“The first quarter of 2022 has been a turbulent one, marked by geopolitical crises, supply chain difficulties and surging inflation. 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,” said Louise Street, senior analyst EMEA at the World Gold Council.
He added: “Given the current market dynamics, investment demand is expected to remain strong, as the combination of high inflation and heightened geopolitical tensions will likely fuel demand for gold among investors.”