Gold shines as economy worsens

Gold demand rose 26 per cent in the fourth quarter as investors bought the precious metal as a store of value amid a worsening global economy, the producer-funded World Gold Council said.

Global demand rose to 1,036.5 metric tonnes from 821.8 tonnes a year earlier, the London-based council said in a report.

So-called identifiable investment, which includes purchases through exchange-traded funds and of bars and coins, almost tripled to 399 tonnes. Jewellery and industrial consumption fell as the recession eroded purchasing power. Supply rose 5 per cent.

"The biggest gain has been the retail investment side," Rozanna Wozniak, the council's investment research manager, said in an interview.

"It's a reflection of uncertainty. Gold's role of a safe haven is coming through."

Investors are seeking to protect their wealth with physical gold as the global economy worsens and central banks spend trillions of dollars to combat the worst financial crisis since the Great Depression.

Assets in three of the industry's largest exchange-traded funds are at all-time highs, while national mints are selling out of coins.

Bloomberg