WGC Spotlights Four Major Trends That Reshaped Gold Demand

The introduction of gold-backed exchange traded products (ETPs) has generated new interest in demand for gold as a strategic asset.

SEATTLE (Scrap Monster):  The World Gold Council (WGC), in its latest report outlined four major trends that have played significant role in reshaping gold demand.

Firstly, the economic development during the past two decades or more within emerging markets, especially China and India has helped in increasing and diversifying the consumer and investor base for gold. Estimates indicate that India and China have nearly doubled their gold market share during this period. It must be noted that consumer demand comprises of demand for jewellery, bars and coins.

The introduction of gold-backed exchange traded products (ETPs) has generated new interest in demand for gold as a strategic asset. The investment demand for gold has witnessed robust growth since 2001. As a result, ETF gold demand and net holdings in gold-backed ETPs have grown rapidly.

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The Great Recession in 2008 led to thorough change in investor attitude towards risk and risk management. This change in attitude has benefitted gold. The emergence of new markets has lifted the demand for gold. The bar and coin demand in the U.S. and Europe reported robust growth post the financial crisis, WGC report says.

Finally, central banks, especially in emerging countries, have been a major driver of gold demand. The latest Demand Trends Report published by the WGC states that central bank gold purchases in Q1 this year witnessed strongest Q1 since 2013. The robust accumulation of gold was led by central banks in Russia and China.

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