Gold demand emphasizes metal’s role as an important portfolio diversifier.
The latest data compiled by the World Gold Council (WGC) shows that global gold demand rose by 7% in Q1 2019 compared to the same period last year. In their 2019 First Quarter Global Trends Report, the WGC’s analysts praised gold’s ability to remain popular with investors in spite of a stubborn stock market.
According to a Kitco article, investment demand once again held a major share, with the 298.1 tons of gold bought by investors in the first quarter amounting to a 3% increase year-on-year. The WGC report stated that participants have taken note of the Fed’s renewed dovish outlook, a key point that should continue driving investment demand throughout 2019.
Talking to Kitco over the Phone, Juan Carlos Artigas, director of investment research at the WGC, acknowledged that growing physical demand has yet to reflect on gold prices, which some investors might find frustrating. Nonetheless, Artigas stressed the importance of maintaining a reasonable gold allocation, especially when the stock market looks to be on its last legs.
“While conditions look okay today, there are some people out there who are concerned about economic growth,” noted Artigas. “Nobody knows if equities are going to go higher. This is the time you should start building a fully diversified portfolio.”
Both Artigas and the team behind the report pointed out that European inflows into the gold market have been much steadier compared to American ones. According to Kitco, the WGC thinks that geopolitical unrest in the region is the primary reason, along with greater inclination towards low or negative interest rates by European central banks.
Although figures from the official sector were lower in terms of investment tonnage, Kitco reports that central bank gold demand has risen by 68% compared to 2018. Governments bought 145.5 tons of gold during the three-month period, making for the fastest rate of purchases since 2013. The WGC’s team said that nine different central banks have bought gold in Q1 2019 in what looks to be a continuation of last year’s heavy interest.
The 530.30 tons of gold bought by jewelers in the first quarter were also a 1% year-on-year increase for the sector. According to Kitco, U.S. jewelry demand has now risen for the ninth consecutive quarter, while overall purchases from the sector remain spearheaded by China and India. In a previous report, precious metals consultancy Metals Focus predicted that jewelry demand will rise to a four-year high in 2019.