Central banks' demand grew by 67% as they bought 224.4 tonnes of gold in April-June 2019.

Global gold demand grew by 8 per cent year-on-year to 1,123 tonnes in the April-June quarter of 2019, mainly driven by central banks purchases and rise in investments in gold-backed ETFs, according to a report.

The overall demand in the second quarter of 2018 was at 1,038.8 tonnes, according to the World Gold Council's Q2 Gold Demand Trends report.

As per the report, central banks' demand grew by 67 per cent as they bought 224.4 tonnes of gold in April-June 2019, compared to 152.8 tonnes a year ago.

Poland was the largest purchaser during the quarter, as the country added 100 tonnes to its reserves, bumping giant purchaser Russia into second place, the report said.

Total investment demand was 1 per cent firmer year-on-year, as healthy exchange-traded fund (ETF) inflows in Europe counterbalanced a 12 per cent drop in bar and coin demand, the report added.

The holdings of gold-backed ETFs grew 67.2 tonnes in April-June period to a six-year high of 2,548 tonnes.

"Continued geopolitical instability, dovish commentary on monetary policy from central banks, and the rallying gold price in June were the main factors driving inflows into the sector in Europe," Somasundaram PR, WGC managing director, India, told PTI here.

Bars and coins saw 12 per cent drop in the second quarter mainly due to China following the easing of currency concerns and high prices.

WGC head of market intelligence Alistair Hewitt said June was a big month for gold as the price broke out of a multi-year trading range to hit a six-and-a-half year high and gold-backed ETF assets-under-management grew by 15 per cent - the largest monthly increase since 2012.

"While the Fed's dovish turn was a key driver for this, it also builds on a strong H1 which saw gold demand hit a three-year high, underpinned by extremely strong central bank buying. But we also saw an uptick in sales at an individual level as investors took advantage of June's price rally to lock-in profits, jewellery recycling and retail bar and coin liquidations both rose," he added.

Meanwhile, the jewellery demand witnessed 2 per cent growth at to 531.7 tonnes from 520.8 tonnes in same period of 2018, due to strong recovery in India's jewellery market driven by a busy wedding season and healthy festival sales, before the June price rise brought it to a virtual standstill.

Gold supply grew 6 per cent in Q2 to 1,186.7 tonnes from 1,121.3 tonnes in the same period last year boosted by the sharp June gold price rally.

A record 882.6 tonnes for Q2 gold mine production and a 9 per cent jump in recycling to 314.6 tonnes led the growth in supply.

"As we head into H2, we believe the factors underpinning ETF inflows and central bank buying, including looser monetary policy and geopolitical uncertainty, will continue. Consumer demand, however, may be a bit soft as people adapt to the higher price level," Mr Hewitt added.