Demand for gold surges

(Getty file)
(Getty file)

The World Gold Council says sales of gold rose 21 percent to 1290 tonnes in the first three months of the year.

That was the second-highest quarter on record.

Investors are buying gold and also exchanging traded funds that invest in gold. ETFs are listed on sharemarkets around the world.

Demand has stayed strong since the end of March.  It closed at US$1272 (NZ$1879) an ounce in the United States on Friday, posting a rise of 20 percent since the start of the year.

The demand for gold is being driven by the uncertainty created by low or negative interest rates. Investors are looking for somewhere to store their money. Some have pulled funds out of world stock markets because they are concerned company valuations are stretched. The volatility in world markets has also driven people towards gold.

The returns for gold investors in New Zealand are also influenced by the movement of the currency. But returns so far this year are up about 20 percent in both US and New Zealand dollars.

The gold price has risen 4 percent over 12 months in US dollars, but is down 14.8 percent over five years.

New Zealand buyers have fared better. The gold price has gained 15 percent in 12 months in New Zealand dollars. It has slipped by just over one percent over five years.

Demand for silver has also grown, partly thanks to solar power.  Installations and investment in solar panels are at record levels globally.

Silver is used in solar panels because of its electrical connectivity. It is also used in plasma TVs, cellphones, medical equipment, personal computers, laptops, digital cameras and tablets.

Just over half of the demand for silver is driven by industrial use.

Thomson Reuters GFMS says demand for silver in solar photovoltaic applications rose 23 percent last year. That was the second year in a row that demand increased.

Silver has risen by around 20 pecent in value this year in US dollars, and closed at US$17.13 on Friday in the United States.

But it is down by half a percent over 12 months in US dollars and has slumped 51 percent over five years.

It has risen 9 percent in 12 months in New Zealand dollars, but is down 43 percent over five years.