WGC: Gold ETFs Demand Surges in Q1, Opportunities Sharing
The gold market saw a strong start to 2022.
On Wednesday the WGC released its quarterly trends report for the first quarter, noting that physical gold demand increased to 1,234 tonnes, a 34% increase compared to the first quarter of 2021.The report said that gold demand saw its biggest quarterly jump since the fourth quarter of 2018; at the same time, demand was 19% above the five-year average.
Global gold ETFs saw their holding grow by 269 tonnes, the highest quarterly inflows since the third quarter of 2020. Total ETF holdings are just 2% down from the record levels seen in 2020.
The report said that central banks bought 84 tonnes of gold in the first three months of the year, down 29% from last year. Egypt was the biggest buyer, increasing its reserves by 44 tonnes.
The WGC analysts said in the report, "the strong start to the year for investment and the negative economic ramifications of persistently high inflation and war in Ukraine make us confident that investment will be higher this year than last. Gold will remain an attractive safe-haven and inflation hedge for the rest of the year, Central banks expect to remain net purchasers for 2022, the whole strategic demand for gold remains healthy."
Bullion is seen as a safe store of value during economic and political crises, a factor that seemed to limit losses on Thursday.
However, currently, the gold price hovers near a 2-month low as the dollar stays elevated.
$Gold - main 2206(GCmain)$ was down 0.49% at US$1,877 per ounce.
GOLD prices weakened on Thursday (Apr 28) towards a 2-month trough hit in the previous session, as the US dollar steadied near 5-year highs, hurting demand for greenback-priced bullion.
Currently, markets see the potential for the U.S. central bank to raise interest rates above 3% by the end of the year. Although higher interest rates will increase gold's opportunity costs.
A stronger dollar makes greenback-priced gold less attractive for other currency holders. The march higher in the dollar pushed gold prices to their lowest since Feb 24 on Wednesday.
In addition, slower economic growth and rising inflation may restrain central bank gold demand in the short term.
WGC analyst said that it's not only gold that is impacted. He noted that tighter U.S. monetary policy is creating a lot of volatility in equity markets.
Gold ETFs Worth Being Reminded of:
* Assets and Average Volume as of 2022-04-26
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