January 31, 2019 / 5:00 AM / 6 months ago

Central banks bought more gold in 2018 than any year since 1967- WGC

    * Gold demand rose 4 pct to 4,345.1 tonnes in 2018
    * Central bank purchases surged 74 percent to 651.5 tonnes
    * Jewellery consumption held firm at 2,200 tonnes

    By Peter Hobson
    LONDON, Jan 31 (Reuters) - A surge in gold purchases by
central banks to the highest since 1967 helped push global
demand for the metal up 4 percent last year, the World Gold
Council (WGC) said on Thursday. 
    The world consumed 4,345.1 tonnes of gold in 2018, up from
4,159.9 tonnes in 2017, the WGC said in its latest quarterly
demand trends report.
    Driving the increase were central banks which bought 651.5
tonnes - 74 percent more than in 2017 and the second highest
annual total on record - as countries including China and Poland
joined Russia, Turkey and Kazakhstan in adding to their
reserves, the WGC said. 
    Jewellery demand was relatively unchanged at 2,200 tonnes,
with rising consumption in China, the United States and Russia
offsetting a steep decline in the Middle East and a very slight
fall in India.
    Retail investment in gold bars and coins grew 4 percent to
1,090.2 tonnes - helped by a sharp 222-percent rise in demand in
Iran to almost 62 tonnes, according to the WGC. 
    Interest from financial investors was lacklustre, with
exchange-traded funds adding 68.9 tonnes to their holdings over
the year, down 67 percent from 2017.
    That changed, however, in the final quarter of 2018, as
rising economic uncertainty in China and elsewhere rippled
through markets. 
    Demand for gold in electronics and for jewellery fell as
consumers scaled back spending, while investment demand
rebounded and exchange-traded funds saw large inflows. 
    Gold is traditionally seen as a safe investment in times of
political or economic turbulence. 
    "Economic uncertainty, slowdown, (and the) U.S.-China trade
conflict supported investment flows," said the WGC's head of
market intelligence, Alistair Hewitt.
    "The flip side is that it hit some elements of the market,"
he said, adding that this dynamic is likely to run through 
    Hewitt said central bank purchases would likely be elevated
again this year and that demand in the two largest gold markets,
China and India, would likely remain firm, with China consuming
900-1,000 tonnes and India 750-850 tonnes in 2019. 
    Global supply of gold grew by 1 percent to 4,490.2 tonnes
last year, the WGC said.     
                           2018      2017   Pct change
 Jewellery                2,200    2200.9           0%
 Technology               334.6     332.6           1%
 Investment              1159.1    1251.6          -7%
  - Bar & coin           1090.2    1045.2           4%
  - ETF                    68.9     206.4         -67%
 Central banks            651.5     374.8          74%
 TOTAL                   4345.1    4159.9           4%
    *Source: World Gold Council, Gold Demand Trends FY 2018

 (Reporting by Peter Hobson; Editing by Elaine Hardcastle)
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