Gold has a key role as a strategic long term investment and as a mainstay allocation in a well-diversified portfolio. Investors have been able to recognise much of gold’s value over time by maintaining a long-term allocation and taking advantage of its safe-haven status during periods of economic uncertainty.

Gold declined 5.2% to US$1,825/oz, returning close to where it started the year. With a stronger US dollar the major culprit, price declines were much milder denominated in other currencies. Weakness in price went hand in hand with a weakness in gold ETFs . European funds continued to lose assets while North American funds saw marginal outflows in February for the first time in two months.

Colossal central bank purchases, aided by vigorous retail investor buying and slower ETF outflows, lifted annual demand to an 11-year high. Annual gold demand (excluding OTC) jumped 18% to 4,741t, almost on a par with 2011 – a time of exceptional investment demand. The strong full-year total was aided by record Q4 demand of 1,337t.