Gold demand posts weakest first quarter since 2008 financial crisis

Leonhard Foeger | Reuters

A worker places gold jewelery into a melting furnace at the Austrian Gold and Silver Separating Plant in Vienna, Austria.

Gold demand slumped to its weakest first quarter since the global financial crisis, the World Gold Council said Thursday, as the prospect of rising interest rates led investors to pursue greater returns elsewhere.

Worldwide demand for gold totaled 973.5 tons in the first quarter of the year, according to the Council’s latest report, down 7 percent year-on-year. The slump in demand for the precious metal also coincided with prices holding within their narrowest range of any quarter in more than a decade.

The trade group that represents the commodity blamed the fall on a 15 percent dip in investment in gold bars to 254.9 tons, as investors in the U.S., China and Germany held off from buying the yellow metal.

Meanwhile, just 32.4 tons of gold flowed into gold-backed exchange-traded funds over the first three months of the year. That was down two-thirds when compared to the same quarter last year.

Jewelry consumption also slipped at the start of 2018, edging down 1 percent. India — the second-largest gold jewelry consumer after China — reported its weakest quarter since 2008, falling 12 percent year on year to 87.7 tons.