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Gold Fund Buying in Frenzy, Hits Record

KB Gold Pure

Gold demand surged to the second-highest level ever as investors piled into funds, doubling investment in the metal.

Global demand in the first quarter climbed 21 percent from a year earlier to 1,289.8 metric tons, the World Gold Council said in a report Thursday. That’s second only to the final quarter of 2012 in data going back to 2000. Still, jewelry buying slid 19 percent amid a strike by jewelers in India and as higher prices deterred buying.

Gold prices jumped 16 percent in the quarter, the most in three decades, even as demand slowed in India and China, the biggest consumers. Investors piled into bullion-backed exchange-traded products amid volatile equity markets, while the outlook for low U.S. borrowing costs and negative rates in some other countries also boosted demand for a store of wealth.

“It’s been a pretty good start to the year,” Alistair Hewitt, the head of market intelligence at the London-based council, said by phone. “You have very clear and visible strength in institutional demand, but at the same time, you have core markets facing significant headwinds.”

ETP holdings rose by 300.7 tons in the three months through March 31, compared with 22.8 tons a year earlier, data compiled by Bloomberg show. Total bar and coin demand was little changed in the period, the council said.

Read more: Gold Fund Buying Frenzy Spurs Demand to Second-Highest Ever

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