Mr Shaokai Fan, the World Gold Council’s head of Asia-Pacific and central banks, said gold has proven its resilience during periods of instability.
“It’s also a relatively liquid asset, so I think that’s what caused a lot of investors to still invest in gold despite the fact that the price is relatively high,” he noted.
He added there are growing concerns about the future of traditional safe haven assets like the United States dollar and US Treasuries.
“When you don’t have those safe haven assets available, you’re left with a few others … (such as) government bonds and gold. Many investors have … turned to gold as a way to brace themselves against an uncertain world,” he said.
NOT ALL GOLD GLITTERS
But not all gold assets are being snapped up.
Demand for gold jewellery fell 20 per cent on-year in the first quarter, partly due to the record price environment.
Gold dealer Brian Lan said jewellery tends to cost more as there are labour costs involved in crafting pieces. Jewellery is also subject to goods and services tax (GST), unlike investment-grade gold bullion.
“So, comparing both, if you want to look for investment, of course more people will look at physical gold instead of jewellery,” said Mr Lan, who is the managing director of GoldSilver Central.
“Many people see it as a universal currency. People (also) think they can melt the gold, if required, and change it into jewellery.”
For the rest of the year, analysts said the appeal of gold with central banks will underpin demand, pushing prices to fresh all-time highs.
Mr Fan pointed out that central banks have been buying huge amounts of gold for the last three years.
“Central banks are ultimately much more sensitive about some of these political developments that we’ve been seeing. They, like other investors, also need to find ways to build more resilience,” he said.
Analysts said that with growing volatility in the world, the rush to gold looks set to continue in the mid- to long-term.
