UNITED STATES (VOP TODAY NEWS) — Central banks continued to buy gold to diversify away from the dollar amid fears of geopolitical turmoil, raising gold prices in the first quarter of 2019, the World Gold Council said in a report on Thursday.
“Institutions tend to diversify and move away from the dollar,” council official John Maligan told AFP.
Central bank purchases of gold amounted to 145.4 tons, up 68 percent from the same quarter of 2018. It is the best performance for the period since 2013.
This performance contributed to the increase in total demand (investors, artisans, individuals and central banks) on gold, which rose in the first quarter of this year by 7 percent to 1053.3 tons compared to the first quarter of 2018.
“Diversification and the desire to have secure assets and liquidity are the main reasons for these purchases,” the report said.
Demand for professional investors not buying bullion but financial products based on gold stocks rose 49 percent from the first quarter of 2018, but remained relatively low and did not exceed 40.3 tonnes in the first quarter of this year.
The report said that the European demand was “affected by the existing geopolitical threat”, and it seems that British investors turned to gold to prevent the risk of the possibility of the United Kingdom to leave the EU without an agreement.
Other European investors, according to Maligan, suffer from “fatigue from Brexit” and raise the political situation in Italy with greater concern.
When gold prices rise, individuals tend to sell jewelry to the family. Maligan said that most often when the jewelry market faces a recession, “the jeweler can decide that it is the right time to diversify his reserves” and defuse his innovations.
The phenomenon is occurring in countries with serious geopolitical turmoil, such as Iran, where jewelery demand fell by 10 percent to 9.6 tonnes, while demand for gold alloys and parts rose 20 percent to 11.2 tonnes.
This article is written and prepared by our foreign editors writing for VOP from different countries around the world – edited and published by VOP staff in our newsroom.
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