Global gold demand surged in the first three months of 2016, boosted by heightened economic uncertainty and increasingly-innovative monetary policy from the likes of the Bank of Japan and European Central Bank.
According to the World Gold Council’s (WCG) Gold Demand Trends report, demand jumped to 1,289.8 tonnes, the strongest first quarter on record.
While in absolute terms demand surged, it was almost entirely driven by paper gold — that traded on financial markets — which rose more than 10-fold from a year earlier to 363.7 tonnes.
“Inflows into ETFs [Exchange-traded funds] of 363.7 tonnes were the highest since Q1 2009 as sentiment towards gold improved markedly,” said the WGC.
“Negative interest rates, stock market volatility and concerns over global economic growth all contributed to the upsurge in demand.”
The chart below, supplied by the Council, reveals the sharp pickup in paper gold demand during the quarter.
Outside of paper markets, demand elsewhere was weak, driven lower by a 17% price jump during the quarter.
Compared to a year earlier, jewellery demand fell by 19% to 481.9 tonnes. Demand from central banks and other institutions also weakened, slipping 3% to 109.4 tonnes.
Physical bar and coin sales bucked the trend, rising 1% to 253.9 tonnes.
By region, gold demand fell in India (-39% to 116.5 tonnes), China (-12% to 241.3 tonnes) and the Middle East (-9% to 79.3 tonnes) compared to a year ago. The noticeable exception was the United States which saw demand increase by 21% to 40.9 tonnes, primarily due to increased paper holdings.
In terms of physical gold, supply increased by 5% to 1,134.9 tonnes thanks to a 8% lift in mine output.
The table below from the World Gold Council, breaks down the quarterly report down into detail.