Global demand for gold rose about 26 per cent in volume terms during the first quarter, driven by increased jewellery purchases and higher sales of gold bars and gold-backed investment products, according to a report from the World Gold Council.
The higher gold jewellery sales during a period when gold traded at an average of $427.35 a troy ounce indicated the gold market had become accustomed to prices above $400, said the WGC.
The report, which was compiled by GFMS, the precious metals research group, shows gold demand totalled 977 tonnes in the three months to March 31, up 26 per cent on the same period a year ago.
It says year-on-year jewellery demand rose 19 per cent to 688 tonnes, an increase of 25 per cent in dollar terms. Jewellery accounted for 70 per cent of gold sales in the first quarter, up on last year’s average.
“We are particularly encouraged to see that the upward trend in gold jewellery demand over the last two years has been sustained,” said James Burton, chief executive of the WGC.
The council said that, with the exception of Europe and Japan, all countries saw a year-on-year increase in jewellery consumption.
Gold traders said strong jewellery sales this year had helped keep gold above $400, and had helped offset the effect of the rise in the dollar against the euro and the large speculative selling in gold futures. Gold was trading $1 lower at $415.60/$416.30 a troy ounce in late London trade yesterday.
The council said gold-backed exchange traded funds accounted for 89 tonnes of gold sold in the first quarter, which was down on the 114 tonnes sold in the fourth quarter of 2004.