• February 26, 2024

Global Q1 gold demand down 23% year on year

According to a report released by the World Gold Council on Thursday, global gold demand fell more than 70% year over year in the first quarter due to a decline in gold investments.

Global gold demand for the quarter was 815.7 tons, a 23% decrease from Q1 2020, although it was “on par with” Q4 2020, the report said.

The investment segment of gold demand declined 71% year over year to 161.5 tonnes in the first quarter as exchange traded gold funds saw cash outflows of 177.9 tonnes, compared to inflows of 299.1 tonnes in the same period last year.

The “bargain hunt”, however, increased cash and coin investments year-on-year by 36% to 339.5 tons, according to the report.

“Lower gold prices and a sustained economic recovery in the first quarter of 2020 have resulted in a very positive response from consumers as lockdown restrictions have been gradually eased in many countries,” said Louise Street, senior market analyst at the World Gold Council.

The prices for the most active gold futures contract lost around 9.5% in the first quarter. The gold contract in June
GCM21, + 0.20%
billed at $ 1,773.90 per ounce on Comex Wednesdayand trades more than 6% lower so far this year.

See: Why gold’s biggest quarterly drop in 4 years doesn’t mark the end of its bull cycle

Bullion and coin demand also saw “a strong rebound from the first quarter hit by the pandemic last year,” peaking since the fourth quarter of 2016, “as investors bought into the price collapse,” Street said. “Growing inflation concerns were also a driver, she added.

However, that positive reaction from gold consumers was “countered by significant outflows from gold-backed ETFs following record inflows last year,” Street said. Gold-backed ETF outflows were “concentrated in Western markets while Asian funds saw net inflows, led by China”.

The jewelry segment of gold demand posted a 52% year-over-year increase in the first quarter to 477.4 tons, according to the World Gold Council report. “India and China have been the main engines of this growth,” said Street.

In particular, jewelry demand from China more than tripled, rising 212% to 191.1 tons – the highest quarterly total since 2015, the report said. The strong quarterly results were attributed to “the improvement in domestic economic conditions, lower gold prices and sales booms triggered by the Chinese New Year, Valentine’s Day and International Women’s Day.”

In the gold market, tech demand rose 11% year over year to 81.2 tonnes in the three months ended March 31, with electronics accounting for 13% of that increase, according to the report.

See also Global silver demand is expected to increase this year. Prices Could Soar More Than 30%: Report

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