AFP, London

Gold is seen as a safe haven asset in times of volatility but investment volumes fell in the first quarter, industry data showed Wednesday, as the Middle East war forced some investors to liquidate holdings to raise cash.

Investment volumes fell by five percent during the quarter, according to the World Gold Council, despite gold having set a record high in January as investors sought refuge from a weak dollar and US President Donald Trump’s erratic policy shifts.

“Hefty outflows in March reversed much of the sizable January and February inflows” into gold exchange-traded funds (ETFs), an easy means to invest in the precious metal, the council said in its quarterly report.

And that was linked in particular to North American funds.

“Oftentimes because gold is so widely accepted, it is the first thing that you sell when you need a certain access to cash or to liquidity,” said World Gold Council expert Juan Carlos Artigas.

Following the US-Israeli attacks on Iran at the end of February, Tehran closed traffic through the Strait of Hormuz, through which a fifth of the world’s oil and liquefied natural gas normally flows.

That sent oil and gas prices rocketing higher and disrupting markets, forcing many investors to raise cash to settle their positions.