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WGC: Global Gold Demand in 2018, boosted by central bank purchases

Editor's note: Updating previous stories with details from the report.

(Kitco News) – The World Gold Council on Thursday quadrupled its global demand for demand in its quarterly report on demand trends, driven by major central bank purchases over half a century.

Gold demand increased last year to 4,345.1 tonnes from 4,159.9 million in 2017. Fifteen per cent of this request was received from central banks that jointly purchased 651.5 tonnes of gold.

The Central Bank was the second-largest overall and grew 74% over the year, WGC said. In addition, the report says net purchases were the highest since the dollar was convertible into gold in 1971.

A greater number of central banks bought yellow metals than in recent years, looking for diversification of reserves. Russia, Turkey and Kazakhstan were still the main buyers, and Russia buys more than 200 tons in the fourth straight year. However, after a long absence in December, the Chinese central bank bought a little less than 10 tonnes and there were several European central banks on the market. In October, Hungary increased its official reserves 10 times to 31.5 tonnes. In Poland, India, Mongolia also marked buyers.

"The growing geopolitical and economic uncertainty throughout the year has increasingly contributed to the diversification of central banks and reoriented the focus on investing in safe and liquid assets," said the World Gold Council.

Central banks now collect nearly 34,000 tons of gold, WGC said.

Investment demand is growing; Jewelry

Gold-backed exchange traded in 2018 with a volume of 68.9 tonnes, while turnover of 112.4 tonnes in the quarter was one time. However, the year-on-year increase was 67% lower than in 2017.

"The stock market volatility and signs of rapid economic growth in key markets contributed to the global fourth-quarter recovery, but Europe was the only region to see net growth over the year," said WGC.

For the first time since 2012, the total value of all gold ETF farms ended at over $ 100 billion a year.

Retail investment in gold bars and coins increased by 4% in 2018 to 1.090.2 tonnes, the report said. The demand for coins reached a five-year high of 236.4 tonnes, the second highest record ever since the second half of the year.

"The demand for coins flourished in some countries, especially in Iran and South Africa, where retailers' concerns about stock market fluctuations, currency weakness and geopolitical uncertainty were common issues," the report said.

Demand for gold bars was stable at 781.6 tons, the fifth straight year at 780–800. [tonnes], ”The report said.

Meanwhile, US, bar and coin demand was 28.1 tonnes, the lowest level since 2007. The WGC blamed it on the stock market and hopes for higher interest rates, which cooled investors' interest in gold.

The demand for full year jewelery was approximately stable at 2200 tonnes.

"Profits in China, the US and Russia largely compensated for the rapid losses in the Middle East," the report said, although India's demand was essentially stable, dipping only four tons to 598.

Gold used in technology rose slightly to 334.6 tonnes, down 5% in the fourth quarter, which the report blamed for a slowdown in smart phone sales, trade war and growing uncertainty about global economic growth.

The annual gold supply, on the other hand, increased by 1% to 4 490.2 tonnes, and mining production increased by 1% to the highest level of 3.364.9 tonnes.

"Although it has been slowing down in recent years, it is already the 10th year of annual growth, and the highest annual output of mines (record of the previous record in 2017)," the report said.

In the fourth quarter, the mine output of 854.1 tonnes decreased by 2% compared to the record level reached in the third quarter.

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