Holdings in gold-backed exchange-traded funds (ETFs) surged by 298 tonnes in the first three months of the year, pushing total inflows into these products to 3,185 tonnes, according to the World Gold Council (WGC) on Thursday.
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“The coronavirus outbreak, which swept the globe during the first quarter, was the single biggest factor influencing gold demand. As the scale of the pandemic – and its potential economic impact – started to emerge, investors sought safe-haven assets,” the council said in its report.
“The COVID-19 pandemic has had a significant and unprecedented impact on global gold demand. The modest strength in the first quarter was due to investment demand, fueled by huge inflows into gold-backed ETFs,” added Louise Street, market intelligence at the World Gold Council.
The unprecedented demand has increased the value the precious metal, which has rallied about 15 percent since the middle of March. According to UBS strategists Joni Teves and Giovanni Staunovo, gold could climb to $1,800 an ounce in the coming weeks.
“Gold is the preferred investment vehicle during times of uncertainty,” Karim Merchant, CEO and managing director of Pure Gold Jewellers, told Zawya earlier.
However, while gold-backed ETFs have emerged as a popular asset among investors, gold bars and coins didn’t attract as much interest.
According to the WGC, investment into bars and coins fell 6 percent to 241.6 tonnes. Jewelry demand also dropped 39 percent to a record low of 325.8 tonnes.
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