Gold ETFs saw the highest quarterly inflows for four years amid global uncertainty and financial market volatility. Holdings of these products reached a record high of 3,185t by the end of Q1.
These investment inflows helped push the US dollar gold price to an eight-year high. Consequently, global gold demand in value terms reached US$55bn – the highest since Q2 2013. The price also reached new record highs in Indian rupees and Turkish lira, among others.
The pandemic slashed jewellery demand as governments across the globe imposed lockdown measures. Demand fell to lowest on record, led by a 65% decline in China – the largest jewellery consumer and the first market to succumb to the outbreak.
Central banks continued to amass gold, although we expect net buying to slow sharply. Amid heightened volatility and uncertainty, global gold reserves grew by 145t in Q1. But Russia announced that it would suspend its long-term buying programme from April, signalling a sharp slowdown in global net buying.
Total Q1 supply fell 4% as coronavirus lockdowns hit mine production and gold recycling. Operations were halted at many projects in an attempt to stem the spread of the virus. And recycling ground to a near standstill towards the end of the quarter as consumers were confined to their homes.
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