Demand for gold jewelry in the first quarter reached its highest level since the initial quarter of 2005, as price drops and demand in China spurred the increase. Much of this was attributed to the Chinese New Year.

Compared to the first quarter of 2014, demand for gold jewelry rose 3% to 571 tonnes, according to the World Gold Council. In China, demand rose 18 tonnes over the same period. Global demand for gold for all uses was flat at 1,074.5 tonnes in the first quarter.

At the same time jewelry rose, demand for gold bars and coins collapsed 39% to 282.5 tonnes. These forms of gold are generally used by investors. Gold prices have crashed from $2,000 in late 2011 to under $1,300 recently. With the drop, investors have fled the precious metal.

Two markets have completely dominated the demand for gold jewelry — India and China. First-quarter demand for gold jewelry in China was up 200 tonnes over the five-year average for the period. In India, the figure was 150 tonnes.

The other two primary sources for gold demand dropped slightly in the first quarter of 2014 from the same period last year. Use of gold for technology dropped 4% to 99 tonnes. Central bank demand dropped 6% to 122.4 tonnes. The World Gold Council reported:

First quarter demand from central banks once again topped the 100t level, and marked the 13th consecutive quarter of net purchases. The desire to diversify holdings in an uncertain global environment continues to underpin this source of demand.

Net purchases reached 122 tonnes. Central banks often own gold as a hedge against inflation and drops in equity and bond markets. Central banks holdings continue to be dominated by the United States, which holds 8,133.5 tonnes, and Germany, which holds 3,386.4 tonnes.

ALSO READ: Credit Suisse a Cautious Buyer of Top Gold Stocks

Thank you for reading! Have some feedback for us?
Contact the 24/7 Wall St. editorial team.