The biggest central bank purchases in a half century and European investors’ search for a haven helped increase gold demand last year, according to the World Gold Council.

Global gold demand rose 4 percent to 4,345.1 tons as central banks bought the most since the U.S. severed the dollar’s peg to bullion in 1971 in a bid to diversify holdings. Bar and coin purchases also gained and European investors stepped up exchange-traded fund buying, partly amid political uncertainty.

“Worries about a slowdown in global growth, heightened geopolitical tensions, and financial market volatility” supported gold demand, said Alistair Hewitt, head of market intelligence at the World Gold Council. “I don’t see any of the risks that investors and central banks are worried about fading anytime soon, and I expect gold to remain an attractive hedge in 2019.”

Gold prices ended 2018 little changed, but rallied toward the end of the year amid concerns about Brexit, a falling stock market and expectations for a less aggressive U.S. monetary policy. The trend has continued this month, with bullion climbing to the highest since May.


Central bank purchases climed 74% to 651.5 tons, the second-highest on record, the WGC said in a report.

Bar and coin demand rose 4% to 1,090.2 tons, with coin purchases at a five-year high

Global ETF inflows fell 67%, but were up for the year in Europe.

Jewelry demand was steady, and total supply was little changed.

While gold investment has benefited from a weaker economic outlook, China’s slowdown and higher prices have started to hurt jewelry demand there.

Purchases fell in the fourth quarter, and will likely face further headwinds, Hewitt said. For central banks, countries like Russia and Kazakhstan should continue buying gold, while ETFs are likely to see more inflows, he said.