Central banks across the globe are building up gold reserves with the first quarter of 2019 seeing significant buying from such entities.
According to the latest Gold Demand Trends report by the World Gold Council, central banks bought 145.5 tonnes of gold in the first quarter — a 68% jump from the same period in 2018 and also the strongest start to a year since 2013.
Meanwhile, the overall global gold demand rose to 1,053.3 tonnes in the first quarter of 2019, up 7% compared to the same period last year.
“This year-on-year increase was largely due to continued growth in central bank buying, as well as growth in gold-backed exchange-traded funds (ETFs),” said a statement by WGC while adding that diversification and a desire for safe, liquid assets were the main drivers of the purchases.
On a different note, the first quarter jewellery demand rose 1% compared with the same period last year, at 530.3 tonnes, boosted by India.
Jewellery demand in India
“A lower local rupee gold price in late February and early March coincided with the traditional gold buying wedding season, lifting jewellery demand in India to 125.4 tonnes, a 5% increase on the same period last year and the highest Q1 since 2015,” stated the report.
Bar and coin investment softened slightly and was down 1% to 257.8 tonnes.
According to the WGC, this was purely due to a fall in demand for gold bars, as official gold coin buying grew 12% to 56.1 tonnes even as China and Japan were the main contributors to the decline.
“The beginning of 2019 saw a sharp recovery in investor sentiment in both the equity and debt markets, but appetite for gold remained solid,” said Alistair Hewitt, head of market intelligence, WGC. “In addition, central banks on both sides of the Atlantic putting monetary policy tightening on hold — and potentially easing — is likely to be supportive of gold,” he added.
