Demand for gold rose by 64% in 2008, with most investors preferring physical gold such as bars or coins, according to the World Gold Council (WGC).
European investors worried about inflation sought to diversify assets away from the collapsing financials sector, a report released by Lipper Fund Market Information reveals.
“The most striking trend has been the reawakening of investor interest in holding physical gold, with demand for bars and coins rising 87% last year according to the WGC,” says the report. “The most dramatic surge was in Europe, where bar and coin demand increased 1,170%.”
Gold rose above $1,000 an ounce in mid-February and Lipper says Citigroup forecasts a possible $2,000 by the summer. A record 11 new funds were launched for European gold investors in 2008. Gold fund sales totalled €2 billion (£1.78 billion), against €166m in 2007.