Growing economic risks and uncertainties pushed first-quarter demand for gold to the highest level since 2016, with prices expected to remain strong for the rest of the year, according to two outlook reports.
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“The broader economic landscape remains difficult to predict, and that uncertainty could provide upside potential for gold,” Louise Street, senior markets analyst at the World Gold Council, said in a reported released on Wednesday that showed global gold consumption increased by 1 per cent year on year to 1,206 tonnes in the first three months of the year.
“As turbulent times persist, safe haven demand for gold from institutions, individuals and the official sector could climb higher in the months to come,” she said.
The council’s report echoed one released by the World Bank on Tuesday that said strong safe-haven demand for gold is expected to persist in the near term, buoyed by uncertainty, geopolitical tensions and concerns about volatility in major financial markets.
Chen Zhiwu, chair professor of finance at the University of Hong Kong, said: “Gold has benefited tremendously from the erratic exercise of power by [US] President [Donald] Trump, making the US dollar and dollar assets less trustable and forcing international investors to diversify away.”
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He said investors were likely to keep turning to gold unless developments in Washington showed signs of stabilisation.
Central banks have entered their 16th consecutive year of net gold purchases, adding 244 tonnes to global reserves in the first quarter – just under a fifth less than in the same period last year.
