Global demand for gold fell 5 percent in the first quarter to 1,097.6 tones, according to the World Gold Council (WGC), driven by a decline in jewelry and central bank buying.
Purchases by the “official sector”, largely made up by central banks, fell 41 percent to 80.8 tones, while demand in the jewelry sector slipped 6 percent to 519.8 tones as a result of higher prices, the London-based industry group said Thursday in a report.
Worries over Europe’s debt crisis have spurred a flight from gold, sending prices to a 10-month low, and raising questions about the safe haven status of the commodity. The fall in gold prices has been accompanied by a rise in the U.S. dollar, which is being viewed as a safer option by investors.
“(Gold’s) negative correlation with the U.S. dollar is increasing. Last year it was close to zero, at the moment it’s approaching negative 0.7, telling us every time the U.S. dollar increases, gold will continue to fall,” Andrew Su, CEO of Compass Global Markets told CNBC.
Su expects prices to fall to $1300 an ounce within the next three months and he says the recent price declines are unlikely to prop up demand for the yellow metal.Page 1 of 3 | Next Page