Gold holdings at the world’s largest bullion-backed exchange-traded fund jumped above 1,000 tonnes for the first time, in the latest indication of investor demand for bullion amid increasing financial turbulence and economic slump.
The SPDR Gold Trust holdings have risen 228.6 tonnes so far this year, to a record 1,008.8 tonnes late on Tuesday, absorbing in the first seven weeks of the year about 10 per cent of the world’s annual mine gold output. The fund is now the world’s seventh largest bullion holder, behind a handful of central banks.
The latest bout of buying pushed spot gold in London on Wednesday to a fresh 7-month high of $973.5 a troy ounce, less than 6 per cent below the all-time high of $1,030.8 an ounce set last March. Gold later traded at $963.1 an ounce, down from New York’s last quote of $969.15 on Tuesday.
Silver rose to 6-month high of $14.31 and platinum and palladium also moved higher.
The industry-backed World Gold Council said that gold consumption last year rose 4 per cent to 3,658.6 tonnes as a 64 per cent surge in investment demand counterbalanced by a 11 per cent drop in jewellery demand and a 7 per cent fall in industrial consumption. Supply fell 1 per cent last year compared to 2007, lead by a 42 per cent drop in official sales from central banks and a 3 per cent drop in mine output. Gold scrap supply jumped 17 per cent.
Looking ahead, the WGC said that the extreme uncertainty that currently surrounds the global economy is unlikely to abate and should continue to underpin net investment demand, particularly demand for bars and coins. “However, we expect this to be partly offset by ongoing weakness in both industrial and jewellery demand,” it added.