Global demand for gold during the third quarter of this year dropped by 19% on year to 892 metric tons, the lowest since that experienced during the third quarter of 2009 as consumers battled the effects of the pandemic, according to the World Gold Council.
The year-to-date gold demand is down 10% on year at 2,972.1 tons. Although jewellery demand improved from the record lows during the second quarter, the combination of continued social restrictions, economic slowdown and a strong gold price proved onerous for many jewellery buyers.
Jewellery demand during the quarter was down by 29% on year at 333 tons. In contrast, bar and coin demand strengthened, gaining 49% on year to 222.1 tons.
The US dollar gold price rose to a record high of US$2,067.15/oz in early August, which impinged onn consumption demand but fuelled investment demand .
Following the price spike, there was a correction, closing the quarter around US$1,900/ounce. Record high prices for gold were also seen in various other currencies, among them the rupee, the yuan, the euro and sterling.
Much of the growth was in official coins, due to continued strong safe-haven demand in western markets and Turkey, where coins are the more prevalent form of gold investment.
There were continued inflows into gold-backed Exchange Traded Funds (ETFs) during the quarter, although at a slower pace than in the first half. Investors globally added 272.5 tons to their holdings of these products, taking year-to-date flows to a record 1,003.3 tons.
Central banks generated small net sales of gold in the third quarter, the first quarter of net sales since the fourth quarter of 2010. Sales were generated primarily by just two central banks – Uzbekistan and Turkey – while a handful of banks continued steady albeit small purchases.
Demand for gold used in technology remained weak, down 6% on year at 76.7 tons during the quarter. But the sector saw a decent quarterly improvement as some key markets emerged from lockdown.
The total supply of gold fell 3% on year in the third quarter to 1,223.6 tons, despite 6% growth in gold recycling, with mine production still feeling the effects of the H1 COVID-19 restrictions.