New York, United States — MININGREVIEW.COM — 21 May 2009 – Global demand for gold jumped 38% year-on-year to 1015.5 tonnes in the first quarter of 2009, as sharply higher buying in gold investment products more than offset depressed jewellery consumption and industrial usage.
“I am not surprised by any increase in gold investment,”, World Gold Council managing director George Milling-Stanley told Reuters prior to the release here of the quarterly ‘Gold Demand Trends’ report. The Council is a trade group funded by the gold mining industry to promote the metal.
Milling-Stanley said gold had benefited from a combination of safe-haven buying, inflation-hedge demand and diversification into gold to reduce overall volatility of investment portfolios amid one of the worst financial crises in history. “We have also seen a move from capital appreciation toward wealth preservation,” he added.
The report revealed that identifiable investment – which includes the popular gold exchange-traded funds (ETF’s) and bullion coins – rose to 595.9 tonnes for the quarter – more than triple the level of 171.3 tonnes a year ago.
It added that ETF’s had been the biggest contributor to investment inflows for the first quarter of 2009, while bar and coin demand had been the main driver in the last two quarters of 2008.
Total jewellery consumption in the first quarter dropped 24%to 339.4 tonnes year-on-year, dampened by higher gold prices and the global economic slowdown, the report continued.
Historically, jewellery demand accounts for more than half of the total gold demand, and total consumer demand in India – which has traditionally been the world’s No. 1 gold buyer – tumbled 83% year-on-year to 17.7 tonnes for the first quarter of the year. Global industrial and dental gold demand also slid 31% to 80.2 tonnes for the quarter.
"If the world economy does not show any signs of recovery, you are likely to see a continuation of subdued jewellery demand and demand for industrial application,” said Milling-Stanley. “I would look for things that were driving gold investment demand in the first quarter to continue in the second quarter,” he concluded.