Demand for gold exchange traded funds was cut by more than half last year as volatility and sell-offs in the precious metal contributed to lower ETF buying, according to a report from the World Gold Council released Thursday.

Gold demand from ETFs fell to 154 metric tons last year from 367.7 in 2010.

“ETF demand, representing a cross section of investors, saw growth slow year-on-year, but picked up towards the latter quarters” of 2011, the World Gold Council said. [Are ETF Flows Sending a Warning Signal on Gold?]

“While bar and coin demand has grown on a year-on-year basis, ETF demand has slowed and over-the-counter (OTC) investment has fallen,” according to the report. The data suggest “ETF and OTC investors have not been accumulating gold at rates that some commentators maintain.” [Gold ETFs and Inflation]

Buying and selling patterns in gold ETFs may be a better measure of long-term demand for the metal, rather than a short-term indicator, analysts say. [Measuring the Impact of Gold ETFs]

Many individual investors and advisors tap ETFs to get liquid exposure to gold. Some funds hold bullion while others track futures contracts. Many prominent hedge fund managers also use ETFs to invest in the precious metal. [Paulson Sells More of Gold ETF]

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