For the first time, investors were the largest buyers of gold for two consecutive quarters

This article is more than 4 years old

This article is more than 4 years old

Hedge funds and other western investors have been piling into gold this year, pushing investment to a record high and driving the price of bullion to its biggest first-half gain since 1980.

The latest report from the World Gold Council, which represents gold miners, indicates that global gold demand reached 2,335 tonnes in the first six months of the year.

Buying by institutional and retail investors, mainly in the west, hit a new high of 1,064 tonnes, 16% above the previous record set in the first half of 2009, at the height of the global financial crisis. Investment accounted for the biggest chunk of gold buying for two consecutive quarters – the first time this has ever happened.

Exchange-traded funds, which track the spot price of gold, had a stellar first half, recording inflows of nearly 580 tonnes.

Hedge funds, Japanese pension funds and bond investors, put off by low yields, have been buying gold amid heightened global uncertainty, according to John Mulligan, the industry body’s head of member and market relations.

He explained that gold, regarded as the ultimate safe haven, had become more attractive due to low or negative interest rates and uncertainty around the UK’s decision to leave the EU and the US presidential election.

Investors have been snapping up gold bars and coins in several markets, notably the US where demand soared 101% between April and June, as gold eagle coins proved popular.

The Royal Mint posted a sharp rise in profits, which it attributed partly to last year’s launch of Signature Gold, an online site allowing investors to buy or sell part of the 400oz gold bars held in its vaults. The Mint said there had been a huge spike in demand after the Brexit vote.

The gold price surged 25% rise to an average of $1,259.6 (£968.14) an ounce in the second quarter. The sharp rise put consumers off buying jewellery and other gold.

Gold price in dollar terms Gold price in dollar terms

China and India, the world’s biggest gold consumers, saw jewellery purchases fall by 15% and 20% in the second quarter, to 144 tonnes and 98 tonnes respectively.

In India, farmers – who account for two-thirds of the country’s gold demand – are under pressure following a patchy monsoon and are buying less as a result. Government tax rises prompted widespread strikes of jewellers, which came to an end in April.

The World Gold Council is predicting that the decline in global jewellery buying will be reversed in the second half of the year – similar to last year’s pattern – when the Hindu festival Diwali and a return to confidence in China are expected to prompt more gold purchases.

Buying by central banks fell by 40% in the second quarter but the price rise dramatically increased the value of gold they held, led by the US Federal Reserve, to $1.4tn globally.