The World Gold Council (WGC) said the UK's total bar and coin demand jumped 28% to 10.9 tonnes in 2016, as British investors took shelter from the pound's 16% slide against the USA dollar and 12% fall versus the euro. The two nations together accounted for 56 per cent of global jewellery gold demand a year ago.
On the global picture, he added: "2016 saw an unprecedented degree of political upheaval, which underpinned huge institutional investor flows into gold". Combined gold bar and coin demand was described as "exceptionally soft" by the WGC, dipping by around 2% to 1,029.2 tonnes.
Investment demand rose in the first, second and third quarters of 2016 by inflows into exchange-traded funds (ETF) - which allow investment without trading on the futures market.
São Paulo - Global demand for gold jewelry reached a seven-year low last year at 2,041 tons, a 15% drop over 2015.
Central banks were more in line with retail, with consumption ending the year at 384 tons, the lowest since 2010 and down 33% from 2015 numbers.
Retail investors' positive response to the price fall in October and November pushed Q4 bar and coin demand to its highest quarterly level since Q2 2013. We anticipate numerous headwinds that affected demand in 2016 to continue into this year. The authors of the report ascribe the 15% fall in global jewellery demand to rising prices for much of the year, regulatory and fiscal hurdles in India and China's softening economy were key reasons for weakness in the sector.
Hewitt added that uncertainty was already extending into 2017 with "fringe parties polling especially well" in many countries, including the Netherlands, France, Italy and Germany.
Jewellery demand in 2016 was down by 22.4% to 514 tonnes compared with 662.3 tonnes in 2015.
Although demand picked up in December and January on the back of lower gold prices, Beijing's recent tightening of currency controls to stem fund outflows amid the yuan's prolonged depreciation saw gold imports constrained, which in turn curbed supply. Post-Brexit uncertainty and pessimism affected consumers with Q4 demand falling by 5% to 12.2t, leading to a 3% drop in annual demand to 25.2t. Total gold supply rose 5% to 4,571 tonnes. But this hit reverse in the fourth quarter.
HSBC expect demand to recover for as long as gold stays under $1,200 an ounce.