TOKYO: Gold sales surged in Japan through March after the country's move to set negative interest rates sent investors scurrying for a shelter, a further sign that global central bank policy of keeping borrowing costs low or below zero is stoking demand for bullion.
Bar sales climbed by 35% to 8,192 kilogrammes in the three months ended March 31 from a year earlier, Tanaka Kikinzoku Kogyo K.K., the country's biggest bullion retailer, said yesterday.
Monetary authorities in more than 20 countries have dropped policy rates below zero to try to revive economies. In a bid to stimulate lending, the Bank of Japan in January joined the European Central Bank in setting subzero rates, along with Denmark, Sweden and Switzerland. Low or negative rates raise the appeal of bullion as it is not an interest-bearing asset.
The Europeans are also buying gold as a haven because of negative rates, Andrea Lang, director of marketing and sales at the Austrian Mint, said earlier this month.
"History shows that, in periods of low rates, gold returns are typically more than double their long-term average," the World Gold Council said in a March 31 report. "Over the long run, negative interest rate policies may result in structurally higher demand for gold from central banks and investors alike."
Gold advanced 16% in the three months through March to post its best quarter in three decades, as the Federal Reserve deferred plans for further interest-rate increases. Bullion traded at $1,234 an ounce on Thursday by 1.59pm Singapore time.
Consumer demand in Japan almost doubled to 32.8 metric tons in 2015 from 17.9 tons a year earlier, according to Gold Council estimates.