European investors appear to have been resuming their love affair with gold.
The increased buying is believed to be the result of uncertainty over Greece and Russia, expected rises in interest rates in the US and UK as well as the €1.1 trillion quantitative easing programme in operation now from the European Central Bank.
The World Gold Council (WGC) said demand in Europe went up sharply in the three months to June while elsewhere demand dropped to a six-year low.
Demand for bullion was particularly strong in Germany, Austria and Switzerland, according to the WGC.
"Fears of a potential Greek exit from the eurozone saw retail investment in gold reach 47 tonnes, a rise of 19% compared to last year," its report said.
It also revealed that central banks in Europe are buying up gold, with Russia’s central bank in particular building up its reserves. During the period, it bought nearly 37 tonnes bringing gold reserves to 1,275 tonnes which amounts to 13% of the country’s total reserves.
The WGC expects Russia to “continue to be a significant player in the global gold market”.
Earlier in the year, European interest in gold had been relatively flat. But this most mercurial asset has begun to shine again and the European bullion market is, for the moment at least, the “world’s leading bar and coin market”.
While gold bars were very popular purchases during the Great Recession, now investors are keener on smaller quantities, such as coins in small denominations.
Demand from gold’s traditional markets fell - in India by 25% and in China by 5%.
