Western investors have driven the demand for gold to a near-record high, according to a new report from the World Gold Council (WGC).
Global gold demand reached 2,335 tonnes (t) in the first half of 2016 – a record for the first half of a year and 16% higher than the previous record in the first half of 2009.
The second quarter of the year continued in the same vein as the first, with overall gold demand growing to 1,050t, up 15% from the 910t recorded in the same period last year.
The report said demand was boosted by “considerable and consistent” investment demand, which reached 448t as investors sought risk diversification and a safe store of value in the face of continued political, economic and social instability.
As a result, the price of gold in US-dollar terms increased by 25% – the strongest first-half price gain since 1980. This contributed to “lacklustre” consumer purchasing, particularly in price-sensitive markets.
Alistair Hewitt, head of market intelligence at the WGC, said: “The strength of this quarter’s demand means that the first half of 2016 has been the second highest for gold on record, weighing in at 2,335t.
“The global picture for gold is dominated by considerable and continued investment demand driven by the West as investors rebalance their investments in response to the ever-expanding pool of negative yielding government bonds and heightened political and economic uncertainty.”
However, she added that while investment is currently the largest component of demand, the WGC is expecting to see a gradual return for the jewellery market in the second half of the year.
Meanwhile, the report said global gold jewellery demand fell 14% to 444t compared with the 514t recorded in the second quarter of 2015.