Global investment demand for gold dropped 23% last year, fueled by a decline in U.S. bar and coin demand to the lowest level in a decade, according to a report from the World Gold Council released Tuesday.
Total gold investment demand fell to 1,232 metric tons in 2017, from 1,595 metric tons the year before, with global bar and coin demand down 2% year-over-year, the WGC reported. The U.S., in particular, suffered the biggest drop in bar and coin demand last year, to 39.4 metric tons—the lowest level since 2007, down from 93 metric tons in 2016.
“The sharp fall was partly because 2016 was a strong year, and partly because investors’ attention was drawn to U.S. equity markets reaching new record highs,” the WGC said. Fourth-quarter 2017 bar and coin demand dropped by 65% from the same time a year earlier.
“It’s not surprising to see overall gold demand down given the backdrop of monetary policy tightening and strong equity markets in 2017, but the market is not in bad shape,” said Alistair Hewitt, head of market intelligence at the WGC. “The U.S. dollar gold price was up 13% and institutional investors…continued to add gold to their portfolios as a hedge against frothy asset prices and geopolitical uncertainty.”
Gold futures GCJ8, +0.74% gained more than 13% last year. They settled Monday at $1,336.50 an ounce, with the year-to-date gain at roughly 1.8%.
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Last year, annual inflows into the gold-backed exchange-traded funds sank 63% to 202.8 metric tons. But 2016’s global gold ETF inflow of 546.8 metric tons was the second-highest on record.
Global jewelry demand climbed by 4% to 2.136 metric tons last year from a year earlier, with Indian jewelry demand leading the pack with a 12% climb, the WGC said.