London: As warnings are consistently being voiced over the growing uncertainty in the global economy, the central banks and investors were found to have turned to the reliable investment in gold. In a World Gold Council report, the demand for gold in the April-June quarter of 2019 has gone up to a whopping 1,123 tonnes. The rise has been attributed to increased investments in the ETF (Exchange-Traded Funds) backed by gold along with the purchase of gold by the central banks.
In the last three years, the demand, as well as the prices for gold, have been slowly increasing. The need in 2017 was at 4,159 tonnes whereas it rose to 4,345 tonnes in 2018. This year, it has crossed 2,176 tonnes in just the first six months. The increase in the demand for gold despite the prices reaching a record-high of $1,400 per ounce (28.35 gm) in June is considered significant. On Friday, the gold rates were ruling at $1,440 per ounce.
Currently, the US economy is performing well, and even the stock markets have recorded positive growth in the first half of the year 2019. The performance of the US economy and dollar was consistently observed to be inversely connected to the gold rates in the past. However, in spite of the US economy as also the US dollar’s excellent performance, the demand and investment in gold are observed to be on a consistent rise.
According to the World Gold Council, the gold demand for the April-June quarter has reached 1,123 tonnes while it was recorded at 1,053 tonnes for the first quarter of 2019. The surge in the central banks’ gold purchases and the increased investments in the gold-backed ETFs are seen as factors responsible for the soaring gold demand in the second quarter.
In the second quarter, the central banks purchased nearly 225 tonnes of gold wherein Poland, Russia and China were the leading nations buying it. The report states that Poland had acquired almost a hundred tonnes of gold in the second quarter of 2019. Furthermore, the Russian and Chinese central banks added 40 tonnes of gold each to their reserves during the period. Also, the central banks of India, Kazakhstan and Turkey reportedly made gold purchases as well.
The increasing demand for gold is indicative of the prevailing economic uncertainty. Additionally, the US-China trade war and the trade disputes between the United States and Europe, are straining the global economy. Even China’s robust economy is reeling under the strain, and the global investors have, therefore, turned to the alternative of making a safe investment in gold.