The war in Ukraine has boosted the demand for gold all over the world – but especially in Germany there has apparently been another rush for bars and coins.

This is the result of figures from the industry organization World Gold Council (WGC) on gold demand in the first quarter.

Accordingly, German private investors acquired bars and coins with a total weight of 47.2 tons in the first three months of this year.

In Europe as a whole, it was 78 tons - the highest quarterly value in almost a decade, as Louise Street, analyst at the World Gold Council, told the FAZ.

High inflows also in gold index funds

Christian Siedenbiedel

Editor in Business.

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Overall, gold demand around the world rose by 34 percent compared to the same quarter last year to 1234 tons.

In addition to inflation, Russia's attack on Ukraine and the associated uncertainty was the most important factor behind the high demand for gold, Street said.

Internationally, it was primarily exchange-traded index funds (ETF) on gold that recorded strong inflows.

Stocks increased by 269 tons in the three months.

These were the strongest quarterly inflows since the third quarter of 2020. The main reason was investors' search for so-called safe havens, said Street.

At the beginning of March, the gold price almost reached its all-time high from August 2020 at $2,070 per troy ounce (31.1 grams), but has since fallen back to $1,888 most recently.

The main reason for the decline was the signals from the central banks to tighten monetary policy, said Street: Higher interest rates tend to be bad for interest-free gold.

Global demand for bars and coins was 282 tonnes in the first quarter, 20 percent below the very strong first quarter of 2021, but 11 percent above the five-year average for that quarter.

Gold demand for jewelery making fell 7 percent year-on-year to 474 tons.

The decline is mainly due to weaker demand in the important gold countries China and India, it said.

Recent lockdowns in China apparently played a role in this.

Demand for gold for the tech industry was 82 tonnes, the highest for a first quarter since 2018.

Egypt and Turkey are increasing their reserves

Central banks increased their gold reserves by 84 tons in the first quarter.

Net purchases more than doubled from the previous quarter, but were down 29 percent from the first quarter of 2021. Egypt, in particular, increased its state gold reserves, by 44 tons, or 54 percent.

But Turkey also bought gold, its reserves increased by 37 to more than 430 tons.

India bought another 6 tons of gold, holding a total of 760 tons.

So far, there has been no sign in the market that Russia is shedding its large gold reserves, Street said.

However, the data on this question is sparse.

At the end of January, Russia held around 2,300 tons of gold, which accounted for around 21 percent of its reserves.

Then, in February, Russia's central bank announced that it was resuming domestic gold purchases, which had been suspended in 2020.

The Council reports that there are currently no more precise figures on the magnitude in which the Russian central bank is buying gold - but the development will continue to be monitored.

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