Demand for gold rose to $102bn in 2008, an increase of almost a third on the previous year.
Demand for the safe-haven asset rose by 29pc to $102bn (£72bn) last year, according to the World Gold Council.
The investment demand for gold, which includes gold exchange traded funds (ETFs), gold bars and gold coins, was 64pc higher in 2008 than 2007. Demand for bars and coins rose by 87pc over 2008.
Related article: In the economic downturn, gold shines ever brighter (Independent)
One ETF, the Russell Global Gold, has delivered spectacular performance, rising by 88pc between the end of October 2008 and January 30 this year
Gold always does well in a downturn and the past year has been no different. Last year shares on global stock markets lost around $14 trillion in value and safe havens such as gold became an attractive option for low-risk investment.
Even lower-value gold investments such as jewellery saw an 11pc increase in demand in dollar terms. Industrial demand for gold however, fell by 7pc. This was a reflection of the economic climate as fewer people bought laptops and other electronic goods that use gold in production.
Aram Shishmanian, the new chief executive of the World Gold Council, said: “These figures confirm that investors around the world recognise the benefits of holding gold during this time of unprecedented global financial crisis, recession and the spectre of future inflation.
“Gold has again proven its core investment qualities as a store of value, safe haven and portfolio diversifier and this has struck a chord with nervous investors.”
“The economic downturn is unlikely to abate in the short term. I anticipate that gold, as a unique asset class, will continue to play a vital role in providing stability to both household and professional investors around the world.”
By Emma Wall
Last Updated: 5:08PM GMT 18 Feb 2009
Source: The Telegraph