Prices surged 18 per cent last year to the highest since 2013 as global economic growth slowed.

Global demand for gold edged lower last year as hefty purchases by investors and central banks were offset by weaker sales to retail consumers who balked at rising prices, the World Gold Council (WGC) said on Thursday.

Prices surged 18 per cent last year to the highest since 2013 as global economic growth slowed.

Gold is traditionally seen as a safe store of value in times of political and economic uncertainty and becomes more popular when interest rates fall, as they did last year.

But higher gold prices, which hit record levels in some currencies, dampened interest in gold jewellery and retail bars and coins.

This dynamic is likely to continue through 2020, with central banks and nervous investors buying while retail consumers pull back, said the WGC’s head of market intelligence, Alistair Hewitt.

“I don’t see any of those (factors) fading any time soon,” he said.

Global demand for gold was 4,355.7 tonnes last year, down 1 per cent from 2018’s 4,401 tonnes, the WGC said in its latest quarterly Gold Demand Trends report.

The year ended on a weak note, with demand over October-December at 1,045.2 tonnes down 19 per cent from the same period in 2018, the WGC said.

For the full year, use of gold for jewellery fell 6 per cent to 2,107 tonnes, with consumption falling 9 per cent in India and 8 per cent in China – the two largest markets.

Purchases of gold bars and coins declined by 10 per cent in India and 31 per cent in China, pulling total global demand down 20 per cent to 870.6 tonnes.

Central banks and other sovereign entities bought 650.3 tonnes of gold last year, just 5.9 tonnes less than 2018’s more than 50-year high of 656.2 tonnes.

Holdings of gold in exchange-traded funds increased by 401.1 tonnes last year compared to a 76.2-tonne increase in 2018.

On the other side of the market, global gold supply rose 2 per cent to 4,776.1 tonnes last year, thanks to an 11 per cent increase in recycling, the WGC said.