Central bank binge buying fuels red-hot gold demand - WGC

    * Gold demand rose 7 pct to 1,053.3 tonnes in Q1 2019
    * Central bank buying surged 68 percent to 145.5 tonnes
    * ETF holdings rose by 40.3 tonnes
    * Brexit fears triggered demand surge in Britain

    By Peter Hobson
    LONDON, May 2 (Reuters) - Strategic buying by central banks
helped push global gold demand up 7 percent in the first quarter
of 2019, the World Gold Council (WGC) said on Thursday.
    Central banks seeking to diversify their reserves bought a
total of 145.5 tonnes of gold over the January-March period, the
WGC said in its latest quarterly demand trends report. 
    That is 68 percent more than a year earlier and follows
purchases of 651.5 tonnes in 2018, which was the most in any
year since 1967.
    "Given the strategic nature of central bank buying, we
expect the momentum to continue," the WGC's head of market
intelligence Alistair Hewitt said, adding that he expected
central banks to buy 500-600 tonnes this year.
    The WGC said the world's first quarter gold usage was
1,053.3 tonnes, up from 984.2 tonnes in the same period in 2018.
    Investors encouraged by political and economic uncertainty
and the prospect of slower interest rate rises piled into
gold-backed exchange traded funds, adding 40.3 tonnes to their
holdings, 49 percent more than a year earlier, the WGC said. 
    Gold is traditionally seen as a safe place to invest in
times of turmoil. Low interest rates make the metal, which does
not offer a yield, more appealing relative to other assets. 
    Consumption of gold for jewellery rose 1 percent
year-on-year to 530.3 tonnes, with a 5 percent rise in Indian
demand to 125.4 tonnes -- the most of any first quarter since
2015 -- partially offset by a 2 percent fall in China to 184.1
    China and India are the world's largest jewellery markets. 
    Lower purchases of gold bars in China and Japan pushed
overall bar and coin investment down 1 percent to 257.8 tonnes,
although purchases in Britain rose 58 percent to 3.6 tonnes as
investors looked to protect themselves against potential Brexit
turmoil, Hewitt said.    
    Gold use in electronics and other industries fell 3 percent
to 79.3 tonnes. 
    Hewitt said he expected China to use 900-1,000 tonnes of
gold in jewellery, bars and coins this year, and India to hoover
up 750-850 tonnes.
    Gold supply in the first quarter was virtually unchanged
from a year earlier at 1,150 tonnes, the WGC said.
                Q1 2019  Q1 2018  Pct change
 Jewellery      530.3    527.3    1%
 Technology     79.3     81.8     -3%
 Investment     298.1    288.4    3%
 - Bar & coin   257.8    261.3    -1%
 - ETF          40.3     27.1     49%
 Central banks  145.5    86.7     68%
 TOTAL          1053.3   984.2    7%
    *Source: World Gold Council, Gold Demand Trends Q1 2019


 (Reporting by Peter Hobson; Editing by Alexander Smith)