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Rising inflation and post-pandemic economic uncertainty have driven demand for gold to its highest level in two years, according to the World Gold Council.

The organization’s latest report shows appetite for the metal hit 1,147 tonnes in the last three months of 2021, its highest level since the second quarter of 2019 and an increase of almost 50% from a year to year.

Demand for gold bars and coins rose 31% to an eight-year high of 1,180 tons, while the jewelry sector rebounded to match 2019’s pre-pandemic total of 2,124 tons.

For the twelfth consecutive year, central banks were net buyers of gold, adding 463 tonnes to their holdings, 82% more than in 2020.

Central banks in emerging and developed markets increased their gold reserves, pushing the global total to a nearly 30-year high.

Louise Street, senior analyst at the World Gold Council, said: “On the investment side, the tussle between persistent inflation and rising rates has created a mixed picture for demand. Rising rates fueled risk appetite among some investors, reflected in outflows from ETFs (exchange-traded funds).

“On the other hand, the search for safe-haven assets has led to an increase in purchases of gold bullion and coins, supported by central bank purchases.

“ETF declines were offset by demand growth in other sectors. Jewelry hit its highest level in nearly a decade as key markets like China and India regained momentum economic.

Street added that the World Gold Council expects demand to fluctuate in 2022, with how central banks handle persistently high levels of inflation being a key factor affecting the sector.

Likewise, the strength of the jewelry market could be hampered if new COVID variants once again restrict consumer access.

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