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A record drop in demand for gold

29 October 2020


In the third quarter of 2020 it fell by 19% on an annual basis to 892 tonnes amid the ongoing coronavirus pandemicGlobal demand for gold in the third quarter of 2020 fell by 19% on an annual basis to 892 tonnes amid the continuing coronavirus pandemic. This is the lowest quarterly figure since 2009. in private, according to the report of the World Gold Council (WGC) "Dynamics of gold demand", which is available to TASS.


The supply of gold on the market for the period decreased by 3% compared to the previous year.Demand for the precious metal since the beginning of the year amounts to 2.97 thousand tons, which is 10% less compared to the same period in 2019.At the same time, investment demand for gold in the third quarter increased by more than 20% compared to last year, notes the WGC.


In this way, investors around the world bought 222.1 tons of gold bars and coins (+ 49% on an annual basis), and the largest growth was recorded in Western markets, in China and Turkey. In addition, investors bought 272.5 tons of gold through gold-backed exchange traded funds (ETFs). Since the beginning of the year, gold ETFs have increased their assets by more than 1,000 tons, and now their reserves amount to a record 3.88 thousand tons."Looking at the investment landscape, we see a new record inflow of gold-backed ETFs, leading to unprecedentedly high global performance. It is just as encouraging that this quarter is emerging as a safe haven for investors. stability in volatile markets, "said World Gold Council analyst Louise Street, quoted in the report.


Although it is too early to predict the impact of the second wave of blockages caused by the pandemic, there are corresponding risks and challenges that investors are already aware of, and this is likely to be supported by gold. in the John Mulligan markets. At the same time, demand from private investors could be jeopardized if strict restrictions are imposed, but the gold ETF market will remain highly liquid, the expert said.If the second wave is serious enough, the gold ETF market will remain deep and liquid, "Mulligan told TASS.


The crisis in the jewelry sector

The combination of social constraints due to the coronavirus, as well as the economic impact of insulation and record high gold prices in many currencies, proved to be too much of a challenge for many jewelry buyers, the report said. Demand for jewelry fell by 29% on an annual basis to 333 tons. While China and India had the largest declines in demand, there was little global interest in jewelry.People are looking for gold in the crisis"We believe this trend is likely to continue for the foreseeable future," Street said.The prospects for global demand for jewelry are guided by broader prospects for economic recovery, a return on consumer confidence and expectations for future income levels and purchasing power, the WGC director said. In particular, the holiday season can help to restore the demand for jewelery, while at the same time continuing the signs of market recovery.


Forecast for the future

Institutional and private investors in the near future will be aware of the extremely difficult economic conditions that have emerged since the pandemic. This should guarantee that demand for gold investment products will remain strong, despite the fact that demand for gold ETFs may not reach the extraordinary levels we saw earlier this year, said John Mulligan.Assuming that the pandemic has been controlled to some extent, we expect consumer markets to gradually return to some level of 'normalcy' and the level of demand may increase further due to delayed demand, for example from purchases of goods. postponed from this year ", the expert told TASS.These factors will allow the gold market to stabilize and balance in 2021, Mulligan concluded.