World Gold demand fell to its lowest level in 11 years in 2020. Aggregating demand across sectors yields a total demand of 3,759.6 tonnes for the year, down 14% from 2019. For the first Time since 2009, after the Lehman crisis, it fell below 4,000 tons. Demand for jewelry and accessories fell to record low levels due to the spread of the CCP virus Epidemic, and purchases by central banks were also significantly reduced. On the one hand, investment demand is at record highs, presenting an icy situation.
The World Gold Council (WGC), an international gold research organization, released the relevant data on January 28. 2020 world demand for jewelry was 1,411.6 tons, down 34% year-on-year, the lowest since statistics were available in 1995. This is due to a combination of factors such as the spread of the Communist virus epidemic, the closure of cities in various countries and the reduction in consumer income due to the economic slowdown, as well as the record high price of gold.
This was particularly affected by the decline in demand from the two largest gold-demanding countries, China and India. India’s jewelry demand was 315.9 tons, a new record low. By the second half of 2020, the gold price spike came to an end and demand in most countries tended to recover, but failed to compensate for the decline in the first half of the year.
The industrial sector was also affected by reduced manufacturing production and supply chain disruptions amid the communist virus outbreak, with demand falling 7% year-on-year to 301.9 tons.
Purchases by central banks and public institutions such as the International Monetary Fund (IMF) also fell sharply. The final net purchases for the year, calculated as buys minus sales, were 272.9 tons, which exceeded sales for the 11th consecutive year but was down 59% from 2019, the highest year in history since the dollar was decoupled from gold in 1971. Countries such as Mongolia and Uzbekistan are selling more than buying, while countries such as Turkey, India and Russia continue to buy more than they sell.
Demand for jewelry and other items declined, while investment demand rose 40% year-on-year to 1,773.2 tons, a new record high. Demand for gold bricks and coins purchased by individual investors was 896.1 tons, up 3 percent year-on-year. In addition, exchange-traded funds (ETFs) with gold as a collateral asset were 877.1 tons, increasing to 2.2 times the previous year. Against the backdrop of heightened uncertainty about the economic outlook due to the epidemic, fiscal expansion in various countries and ultra-low interest rates, investment funds flowed in, pushing the price of gold to a record high.
From October to December, from the expectation that the popularity of vaccines would allow the economy to recover with it, there was a change in the movement of investment funds, such as gold ETFs turning to capital outflows. However, the low interest rate environment in various countries, expanding fiscal deficits, and adjustment pressure from stock prices at high levels, etc., the potential factors leading to the growth of gold investment demand still have not seen much change. For the demand forecast in 2021, World Gold Council advisor Takada Morita said, “On the one hand, we will continue to maintain a certain level of investment demand, on the other hand, demand for jewelry and other jewelry will benefit from the economic recovery centered on emerging market countries.
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