Inflows to gold-related exchange-traded funds (ETFs) trading in the U.S. were solid in the first quarter, but data suggest that overall global bullion demand was lethargic in the first three months of 2017. Year-over-year comparisons were bound to be difficult to top for gold because the first quarter of 2016 represented record investor demand for the yellow metal. Global central banks played a role in sluggish first quarter demand this year.

"The 18 percent year-on-year decline suffers from the comparison with Q1 2016, which was the strongest ever first quarter," said the World Gold Council (WGC). "Inflows into ETFs of 109.1 tonnes, although solid, were nonetheless a fraction of last year's near-record inflows. Slower central bank demand also contributed to the weakness. Bar and coin investment, however, was healthy at 289.8 tonnes (+9 percent year-on-year), while demand firmed slightly in both the jewelry and technology sectors." (See also: Top 10 Countries With the Highest Demand for Gold Jewelry.)

Even as the Federal Reserve raised U.S. interest rates in March, marking the third time in 15 months it did so, investors poured nearly $458 million in new assets into the SPDR Gold Shares (GLD), the world's largest gold ETF, in the first three months of the year. Gold typically loses allure among investors when interest rates rise because bullion does not pay dividends or interest. Additionally, the dollar usually strengthens when rates rise, weighing on dollar-denominated commodities. However, the dollar has been flat this year, helping buoy gold in the face of rising rates. (See also: The Effect of Fed Fund Rate Hikes on Gold.)

European investors displayed enthusiasm for gold ETFs in the first quarter. "Although inflows were just one-third of the extraordinary levels seen in Q1 2016, demand was firm. European-listed products were the most popular, due to continued political uncertainty in the region," said the World Gold Council.

In the first quarter, investors were enthusiastic about gold miners, namely the VanEck Vectors Gold Miners ETF (GDX) and the VanEck Vectors Junior Gold Miners (GDXJ). GDX and GDXJ, the two largest gold miners ETFs, saw combined first quarter inflows of over $2.6 billion, but that situation is reversing in the current quarter. With gold prices recently retreating, investors have yanked over $2.1 billion combined from GDX and GDXJ this quarter.

Investors are departing GDX and GDXJ even as they add money to GLD. GLD has seen second quarter inflows of nearly $870 million. After a slow first quarter, central banks could boost bullion going forward. "Central banks showed a diminished appetite for gold purchases; China's purchasing program was on pause during the quarter as its foreign exchange reserves remained under pressure. Sales, once again, were sparse," according to the World Gold Council. (See also: What Drives the Price of Gold?)

Want to learn how to invest?

Get a free 10 week email series that will teach you how to start investing.

Delivered twice a week, straight to your inbox.