Australian consumer demand for gold surged by 24 per cent year-on-year in the first quarter to a total of 8.9 tonnes, a new report from the World Gold Council has revealed.
This included an estimated 19 per cent increase in the demand for gold bars and coins to 6.2 tonnes as well as an estimated 40 per cent increase in gold jewellery demand to 2.7 tonnes.
“Positive consumer economic sentiment is a key driver of retail demand for gold, and with inflation surpassing the RBA’s 2 to 3 per cent target, the rationale for holding gold is growing,” commented World Gold Council regional CEO for APAC (ex-China) Andrew Naylor.
“Australian investors often use gold as a diversifier and a hedge, which is increasingly important in an economy where many have strong exposures to property and pro-cyclical assets.”
Globally, gold demand during the first quarter was up by 34 per cent driven by strong ETF flows amid geopolitical and economic uncertainty.
The World Gold Council said that gold ETFs had their strongest quarterly inflows since the third quarter of 2020 with a rise in holdings of 269 tonnes that offset last year’s 174 tonne annual net outflow.
“The first quarter of 2022 has been a turbulent one, marked by geopolitical crises, supply chain difficulties and surging inflation,” said World Gold Council senior analyst EMEA Louise Street.
“These global events and market conditions have solidified gold’s status as a safe haven holding, not just for investors but also for retail consumers thanks to its unique position as a dual-natured asset class.”
Gold bar and coin demand worldwide remained 11 per cent higher than the five-year average at 282 tonnes but was 20 per cent lower year-on-year.
Central banks added 84 tonnes to official gold reserves during the quarter, with net buying more than double the previous quarter but down 29 per cent on a year ago.
Meanwhile, total gold supply lifted 4 per cent year-on-year as a result of strong mine production and a resurgence in recycling.
“Given the current market dynamics, investment demand is expected to remain strong as the combination of high inflation and heightened geopolitical tensions will likely fuel demand for gold amongst investors,” noted Ms Street.
“On the other hand, consumers are facing the global cost of living crisis, meaning many will reconsider how they spend their money.”
Jon Bragg
Jon Bragg is a journalist for Momentum Media's Investor Daily, nestegg and ifa. He enjoys writing about a wide variety of financial topics and issues and exploring the many implications they have on all aspects of life.
