In the first quarter of year 2020, gold demand went up by more than a 1000 tonnes. The main source of demand was investment.
Q1 Performance
The increase in demand for gold investments was driven primarily by the coronavirus pandemic since gold is seen as an effective and reliable hedge in economic stress. Gold has emerged as a safe haven for investment while stocks and bonds plunge at alarming rates. Global holdings of gold-backed ETFs have reached a record level of 3,180 tonnes as a consequence of this surge in demand.
In the first quarter, the total investment in gold bar and coin fell by 6%. While there was a sharp 26% surge in the demand for gold coins, there was a 19% decrease in the demand for gold bars during this time. There was also a sharp 36% fall in the demand for jewelry due to the coronavirus pandemic. Technology demand went down by 8% during the quarter. Central banks also purchased gold in lower amounts as compared to the first quarter of the previous year, while the demand by central banks was down by 8%.
Gold mining also fell by 3% year-on-year.
Gold ETFs
Gold ETFs saw their highest rise yet in this quarter compared to the past 4 years. This was driven mainly by a lack of investor confidence in the financial market as a result of the coronavirus pandemic. As a result of this massive buying, gold prices in the US rose to an 8 year high. The global demand for gold ETFs during the first quarter was $55 billion, which is the highest amount since the second quarter of 2013. 7
Mining
The coronavirus pandemic has resulted in shutdowns and lockdowns worldwide due to which mining activity and recycling fell by 4% during the first quarter. Recycling, in particular, saw a sharp fall since consumers are staying indoors.