In breaking news Wednesday, dollar demand for gold around the world reportedly reached a quarterly record of $32 billion in the third quarter of 2008 as investors sought refuge from the global financial crisis, says a new report from the World Gold Council.

The third quarter figure was 45% higher than the second quarter’s record, says the council, a commercially-driven marketing organisation, funded by the world’s leading gold mining companies.

Identifiable investment demand was the biggest contributor to overall demand during the quarter, up to $10.7 billion, and double the levels from the same quarter last year, according to independently compiled figures in the Gold Demand Trends report.

Gold ETFs recorded quarterly inflow of 150 tonnes in Q3, says the WGC, with the peak occurring in late September.

 “As the financial crisis deepened these increases in identifiable investment demand were offset by outflows in “inferred investment”. This was characterised by hedge funds liquidating investment positions in gold as they were forced to raise cash and by institutions liquidating commodity index investments, including gold, as fears of recession deepened,” says the report.

Retail investment demand also rose 121% to 232 tonnes in the third quarter, amid “witnessed widespread reports of gold shortages among bullion dealers across the globe, as investors searched for a haven,” says the council. 

"Looking forward, given the uncertainty that surrounds the global economy, gold’s safe haven appeal should continue, but so too will the possibility of heightened levels of activity in the speculative side of the gold market, therefore it is too soon to call an end to market volatility," says James E. Burton, chief executive officer of the World Gold Council.