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Gold demand rose by 2 per cent as investment surge: WGC

Gold Prices

The latest report by The World Gold Council on global trends in 2016 showed a modest overall increase in demand for the metal, but that was exclusively on the back of investor purchases of ETFs, primarily on Western markets.

Jewellery demand meanwhile sank over the year on the back of higher gold prices.

Taking into account a 33 per cent decline in net gold purchases by central banks to the lowest level since 2010, overall global gold demand climbed 2 per cent to a three-year high of 4,215.8 tonnes.

Alistair Hewitt, Head of Market Intelligence at the World Gold Council, commented: "2016 saw an unprecedented degree of political upheaval, which underpinned huge institutional investor flows into gold".

Total investment demand for 2016 was down by 17.1% at 161.5 tonnes in comparison with 194.9 tonnes in 2015 while in value terms, gold investment demand was Rs 43,647.5 crore, a fall of 6.3% from 2015 (Rs 46,597.3 crore).

It said Indian demand faced a raft of challenges throughout the year, including regulatory changes, culminating in the surprise demonetisation policy, which severely hampered demand in both the jewellery and retail investment sectors.

In addition, demand from China rose 25 percent previous year. "These geopolitical issues have driven continued inflows into gold-backed ETFs this year".

Retail investors' positive response to the price fall in October and November pushed Q4 bar and coin demand to its highest quarterly level since Q2 2013.

Global demand for physical gold in the form of jewellery, coins and bars fell 9 percent as higher prices and import curbs hurt demand, particularly in the major Chinese and Indian markets.

Hewitt added that uncertainty was already extending into 2017 with "fringe parties polling especially well" in many countries, including the Netherlands, France, Italy and Germany.

Global gold demand rose merely 2 percent in 2016 and touched 4,309 tonnes. Since the beginning of the year, gold prices are up 5.29 percent and the precious metal hit an 11-week high this week. Demand from the technology gadget manufacturers also fell 3% to 322 tonnes. Gold Demand Trends data can also be explored using our interactive charting tool http://www.gold.org/supply-and-demand/interactive-gold-market-charting. However there were outflows in the fourth quarter.