World Gold Council - First Quarter Gold Demand 2nd Largest on Record
Global demand for jewelry fell by 19% which was caused by higher prices and industrial action in India. But total gold bar and coin demand rose marginally by 1%.
A very important factor in this equation is that world central banks remained strong buyers, purchasing 109 tons during the quarter.
As a result, the World Gold Council confirmed that the gold price rose 17% in dollar terms during the first quarter.
In its announcement, The World Gold Council lists the primary factors it feels are behind the sudden gold price surge as well as giving its opinion regarding future gold price movements-
"The rally, in our view, was supported by five key factors:
- Ongoing concerns about economic growth and financial stability in emerging markets
- A hiatus in the rise of the US dollar
- The implementation of negative interest rate policies by leading global central banks
- The return of pent up investment demand for gold
- Price momentum (i.e. investors following gold’s upward trend).
For those of you not familiar with the World Gold Council, it is the market development organization for the gold industry. It consists of 17 members, each member being a major gold mining operation headquartered throughout the world and together these members have operations in over 40 countries.
This obviously has positive implications for the gold price in the near future and most likely for years to come if demand continues to strengthen, and the abovementioned factors remain in place.
By Tzemach Richter