Gold demand soars as investors seek better ways to safeguard their wealth.

According to new figures from the World Gold Council (WGC), demand for gold is increasing among investors as attention turns to wealth preservation.

The total demand for gold in the first quarter of 2009 reached 1,016 tonnes, up 38% over the year. Demand for gold as an investment has grown by 248% to 596 tonnes since the beginning of 2008.

Germany was the single largest gold bar and coin market in the first three months of 2009, with demand rising by 400% to 59 tonnes over the year. Switzerland followed with demand increasing by 437% to 39 tonnes.

Despite demand rising for gold as an investment, gold for jewellery has experienced a significant drop of 24%. The WGC blamed the fall on the difficult economic conditions most countries are currently facing. Only China bucked the trend with a 3% increase in gold jewellery demand.

India, traditionally the world’s largest gold market, witnessed a decline of 83% over the year to just 17.7 tonnes due to a major deterioration in the domestic economy.

Industrial demand for gold also saw a decline of 31% for the first quarter of 2009 compared to the same period last year, mainly due to the drop in demand for electronic consumer goods.

Aram Shishmanian, CEO of the WGC, commented: “Gold, as one of the few assets that has held its value during the current economic crisis, has been sought out by investors who are drawn to its proven protective attributes as well as safeguarding themselves from the erosive effects of future inflation.”