First-quarter gold demand was 34% higher year-on-year, at 1 234 t, driven by strong exchange-traded fund (ETF) inflows, a new report published by industry organisation the World Gold Council (WGC) shows.

In a quarter that saw the dollar gold price rise by 8%, gold demand was the highest it has been since the fourth quarter of 2018 and 19% above the five-year average of 1 039 t.

Russia’s invasion of Ukraine and surging inflation were key factors driving both the gold price and demand, the WGC states.

Gold ETFs had their strongest quarterly inflows since the third quarter of 2020, fuelled by safe-haven demand. Holdings jumped by 269 t, more than reversing the 174 t yearly net outflow from 2021.

Bar and coin investment was 282 t in the period, 20% lower than the very strong first quarter of 2021, but 11% above its five-year quarterly average.

Renewed Covid-19-related lockdowns in China and historically high local prices in Turkey were key contributors to the year-on-year decline, the WGC points out.

Jewellery consumption lost momentum in the period, with demand 7% lower year-on-year, at 474 t. The drop was largely owing to softer demand in China and India.

Central banks added 84 t to global official gold reserves during the first quarter. Net buying more than doubled from the previous quarter, but fell 29% short of the first quarter of 2021.

The technology sector had a steady start to the year, as demand of 82 t was the highest for a first quarter since 2018, driven by a modest uptick in gold used in electronics.

The LBMA Gold Price PM gained 8% in the period, its best quarterly performance since the second quarter of 2020. The average quarterly price of $1 877.2/oz was about 5% higher than in the first quarter of last year.

Gold mine production was 3% higher year-on-year at 856 t. China resumed near-full production following safety-related closures, while higher-grade ores were mined at various existing sites.

The supply of recycled gold jumped to 310 t – a 15% year-on-year increase. This was the strongest first quarter for gold recycling activity for six years, the council highlighted.