Mumbai: Demand for gold soared by 21 per cent to 1,290 tonnes during the first quarter for this year mainly due to huge inflows into exchange traded funds (ETFs) and an uncertain financial landscape, says a report.
"Gold demand reached 1,290 tonnes in the first quarter of 2016, a 21 per cent increase, compared to 1,070 tonnes in the same quarter of 2015.
"This increase was driven by huge inflows into exchange traded funds fuelled by investor concerns regarding economic fragility and uncertain economic conditions," said the World Gold Council's 'Gold Demand Trends' report.
Inflows into ETFs totalled at 364 tonnes in the quarter compared to 26 tonnes in January-March quarter of 2015.
Investors mainly favoured gold as a risk diversifier due to the negative interest rate environment in Europe and Japan, combined with uncertainty over the Chinese economy, anticipation of slower interest rate rise in the US and global stock market turmoil, the report said.
In total, investment demand was at 618 tonnes, up 122 per cent from 278 tonnes in the same period last year that ignited a rally in the gold price which appreciated by 17 per cent in dollar terms during the quarter, it said.
However, the strong investment performance was not reflected in the jewellery sector as global demand was down by 19 per cent mainly driven by India and China.
Higher prices and industrial action in India and a softening of the economy in China has resulted in consumers delaying jewellery purchases, it said.
Further, the report said even as Central banks remained strong buyers for the 21st consecutive time in the quarter purchasing 109 tonnes, it dipped slightly to 112 tonnes in the first quarter of 2015.
(This story has not been edited by NDTV staff and is auto-generated from a syndicated feed.)
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