When we talk about increasing gold demand, the focus tends to fall on Asia. Earlier this week, we reported surging investor demand for the yellow metal in China. The Japanese have also gone on a gold buying spree since that country’s central bank plunged interest rates into negative territory. But it isn’t just Asians who are bullish on gold. Analysts say they see signs of growing demand for the metal in Europe as well.

According to an article published at CNBC, central bank action appears to be rejuvenating gold in Europe, as the entrenchment of negative interest rates makes depositing cash in banks less and less rewarding. UBS strategist Joni Teves said European central bank policy could become increasingly influential on the gold market:

Although gold is very much driven by US Federal Reserve policy, the impact of European Central Bank (ECB) policy decisions may become increasingly relevant for gold price action, as concerns about negative interest rates gain traction among investors.”

Earlier this month, the ECB dropped its three main interest rates deeper into negative territory, cutting the deposit rate 10 basis points to negative 0.4%. Teves said deepening concern about negative rates could lead more and more investors to buy gold.

The CNBC article pointed out one argument against investing in gold is the cost of storage, but as Albert K Lu said in his latest SchiffGold Videocast, the traditional arguments against holding gold are becoming more and more applicable to cash. That makes buying gold much more appealing in a negative rate environment.

European dealers say they are already seeing signs of increasing gold demand. Ross Norman, the CEO of British gold dealer Sharps Paxley, told CNBC the sale of gold bars is brisk.

Many of our clients are high-net worth investors concerned about the economy — or ordinary ‘joe public’ investors who are equally concerned and amazed you can simply walk in and just purchase a bullion bar.”

German based Munich Re, the world’s second-largest reinsurance firm, announced it was pulling cash from banks and storing it in its own vaults to avoid negative rates. The company is also reportedly diversifying into gold. The company’s chief executive said the moves were spurred by European Central Bank policy.

The side effects of the ECB policy are of course now having quite devastating consequences. I think they are solving the wrong problem with the wrong remedies.”

Negative rates aren’t going away any time soon, and they may be coming to the US in the near future. These negative rates won’t do anything to address the deepening economic crises, but they are certainly good for gold.