“Price hike” and “Corona” drop global demand for gold by 19%

Global demand for gold decreased by 19% year-on-year to reach 892 tons in the third quarter of this year, as a result of 3 main factors, namely the Coronavirus (Covid-19) pandemic, high prices and slow economic activity. The demand recorded 2,972.1 tons since the beginning of the year, which is 10% less compared to the same period in 2019, according to the latest report issued by the World Gold Council on demand trends. While the total demand for gold decreased, the third quarter of the year witnessed a significant growth in investment demand, which rose by 21% year-on-year. Worldwide, investors bought 222.1 tons of bullion and gold coins and an additional 272.5 tons through gold-backed ETFs. Gold-backed ETFs increased their holdings at a record rate of 1,003.3 tons. The effects of social distancing restrictions, an economic slowdown, and a record-breaking rate of gold price outweighed the potential for jewelery buyers.

Demand fell 29% year-on-year to 333 tons in the third quarter, thus down from the relatively weak demand recorded in the third quarter of 2019. Quarterly inflows of 272.5 tons also lifted the global holdings of gold-backed ETFs to A new record of 3,880 tons. The price of gold rose to a record high of 2,067.15 dollars an ounce in early August, and investment in bullion and gold coins jumped to 222.1 tons in the third quarter of the year, an increase of 49% year-on-year. Central banks achieved modest net sales of 12 tons of gold in the third quarter of this year.

Louise Street, of the Market Intelligence Group at the World Gold Council, said: We are still feeling the impact of the Coronavirus pandemic on the gold market around the world. Noting that the restrictions of social distancing and the economic impact of the curfew and the unprecedented rise in the price of gold greatly exceeded the ability of the potential buyer of jewelry, and expected this situation to continue for some time, noting the brilliance of the role of gold as a safe haven for individual investors during the third quarter of this year. The rise in prices significantly increased sales of used gold.

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