Photo on file with the French broadcaster: Gold jewelry sales jump 34% in 2020 due to Covid-19 outbreak
The price of gold soars in 2020, exceeding $2,000 per ounce. Yet, demand for the precious metal is at its lowest level in too 11 years. Such a market is unconscionable.
On Friday (January 29, 2021), our RFI French network published in the Chronique des matières premières a new report by Claire Fages, economics correspondent, entitled: Gold demand collapses in 2020, but gold prices reach new heights (La demande). La demande d’or s’est effondrée en 2020, pourtant année de son record de prix.
The World Gold Council notes that the demand for gold plunges 14% in 2020. And for the first Time since the financial crisis in 2009, demand for gold does not exceed 4,000 tons. This is difficult to understand because, the price of this precious metal kept rising last August to more than $ 2,000 per ounce.
Investment funds in pursuit
Not all of them are bullish on gold. This is mainly due to investors’ fear of the Covid crisis and the fact that, given the current low interest rates, there are no other investments that could be more profitable instead. The trading volume of gold coins and bars remained at about 900 tons. However, it is noted that the main force of this investment boom is the gold investment public funds ˎexchange-traded funds or tracker funds, which also happen to trade at a volume of almost 900 tons. In this area, the 120% year-on-year increase is the main reason for the surge in gold prices in 2020.
Central banks cut back on purchases
The amount of gold purchased by central banks fell by as much as 60%, 273 tons. Although, Turkey is still buying, Russia has stopped buying gold since March. Germany, on the other hand, is selling. It is worth noting that the economies of all countries are in need of funds due to the Covid-19 Epidemic.
Gold jewelry sales collapse
Sales of gold jewelry are at an all-time low. Due to the epidemic, sales of gold jewelry plunged 34% last year, 1,400 tons. And gold jewelry is the largest market use of this precious metal. China and India are the world’s largest buyers of gold. Jewelry stores closed and shut down as spending braked due to the city closure.
Photo on file with RFE: Gold bars in a Dubai gold store taken on May 13, 2020
Industrial demand falls
Industrial demand for gold fell 7% to 300 tons. The logistical supply chain was disrupted by the epidemic, despite the large number of screens purchased by consumers who were kept at Home by the city closure.
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