The global gold demand rose 1% year-on-year to 1,083.8 tons in January-March, spurred by the coronavirus pandemic, the World Gold Council reported on Thursday.
As the scale of the pandemic and its potential economic impact started to emerge, investors sought safe-haven assets, the report said, adding tendency offset the marked weakness in consumer-focused sectors of the market.
Gold Exchange-Traded Products (ETPs) saw the highest quarterly inflows for four years, lifting global holdings of these products to a record high of 3,185 tons by the end of the first quarter.
These investment inflows, amid the global uncertainty and financial market volatility, helped push the US dollar gold price to an eight-year high.
Global gold demand in value terms reached $55 billion, the highest since the second quarter of 2013, it said.
The globally imposed lockdown measures slashed jewelry demand which fell to lowest on record of 325.8 tons, led by a 65% decline in hardest-hit China -- the largest jewelry consumer.
In value terms, the first quarter global demand fell to $16.6 billion, its lowest since the second quarter of 2010 in the aftermath of the Global Financial Crisis.
"Jewellery consumption plunged in the first quarter as local gold prices in various countries rocketed and markets were shuttered in efforts to contain the coronavirus pandemic," it said.
Central banks remained net gold buyers in January-March despite an expected sharp slowdown.
Global gold reserves of central banks grew 145 tons, 8% down from the same quarter last year, but 9% above the five-year quarterly average.
The report recalled that the largest gold buyer Russia will suspend its long-term buying program from April, signaling a sharp slowdown in global net buying.
Turkey added 72.7 tons, boosting gold reserves to 485.2 tons, 29% of its total reserves, it said.
"It was by far the largest buyer during the quarter, having also been the leading buyer in 2019, accounting for 50% of the Q1 global total," the report said.
Meanwhile, the gold supply also fell by 4% to 1,066.2 tons as coronavirus lockdowns hit mine production and gold recycling, according to the report.