Eric Onstad

LONDON, (Reuters) – The global demand for gold rose 34% in the first quarter of this year, fueled by rising inflation and investors concerned about Russia’s invasion in Ukraine, according to the World Gold Council (WGC), in a Thursday report.

A strong demand for gold-based ETFs (exchange traded funds) allowed us to increase total gold demand by 1,234 tonnes over the first three month of 2022. It was the highest amount since the fourth trimestre of 2018.

Also, the first quarter’s total exceeded 1,039 tonnes per annum (the five-year average).

The WGC stated that “Gold ETFs saw their strongest quarterly flows since Q3 2020. This was fueled by safe-haven demands.”

GRAPHIC: Gold Demand Increases in Q1 2022 on strong EFT flows https://fingfx.thomsonreuters.com/gfx/mkt/dwvkryklqpm/Q1%202022%20Gold%20Demand%20WGC.png

Prices rose to $2,069.89 per ounce in October, just a fraction from the record high reached in 2020 due to mounting concerns about Russia-Ukraine and rising inflation.

While gold ended the quarter higher by 6%, it fell to its lowest level in two months as dollar rallying on the expectation of more aggressive U.S. tightening. [GOL/]

According to the WGC, purchases of small coins and bars in quarter one fell by 20% due to renewed Chinese lockdowns and high Turkey prices.

The lackluster performance of jewellery buying was due to a softening demand from major Indian and Chinese consumers.

The official gold reserve of central banks was increased by 84 tonnes, down 29% from the previous year but still more than twice the amount in the last quarter.

It was difficult to predict the future as the Ukraine conflict was still unresolved. But the WGC indicated that gold investment would continue growing through 2022, while consumers could be cautious.

It stated that rising prices and a widespread economic slowdown will likely pressure consumer demand.

GOLD DEMAND (T)*

Q1 2022 Q4 Q1 y-o-y

2021 2021 %

Change

Jewellery manufacturing 517.8 709.2 538.7

Jewellery 474.8 509.3

Consumption

Inventory of Jewellery 43.7 22.9 29.4 49%

Technology 81.7 85.9 81.0 1%

– Electronics 67.0 70.6 66.2 1%

– Industrial Other 12.0 12.5 11.9 1.1%

Dentistry 2.7.2.7.2.9 – 7%

5550.7 34.4 181.8 203%

– Coin and bar 281.9 322.3 351.8

– ETFs & similar 268.8 -17.9 -170.0 –

83.8 41.2 117.5

GOLD DEMAND 1234.0 1150.8 919.1 34%

OTC and other: 77.4 84.7 189.7

TOTAL DEMAND 1156. 1235.5 108.8 4%

* Source: World Gold Council, Gold Demand Trends Q1 2022