Global gold demand at 13-year low as China buys but investors sell - WGC

Credit: REUTERS/JASON LEE

Global demand for gold in the first quarter of 2021 was stuck near its lowest level since 2008 as heavy selling by investors in Europe and North America offset a revival of consumer buying in Asia, the World Gold Council (WGC) said on Thursday.

By Peter Hobson

LONDON, April 29 (Reuters) - Global demand for gold in the first quarter of 2021 was stuck near its lowest level since 2008 as heavy selling by investors in Europe and North America offset a revival of consumer buying in Asia, the World Gold Council (WGC) said on Thursday.

Traditionally seen as a safe asset, investors bought gold in unprecedented quantities last year as the coronavirus swept through the world economy.

However, lockdowns to contain the pandemic simultaneously collapsed sales of gold jewellery, bars and coins in countries like China and India that are typically the biggest bullion buyers.

This dynamic is now reversing as the global economy recovers, with investors unwinding some of their positions and consumers in Asia returning to the market.

Global demand amounted to 815.7 tonnes over January-March, up slightly from 813.7 tonnes in October-December last year but down 23% from the first quarter of 2020, the WGC said in its latest quarterly report.

Consumer demand in China, typically the biggest market, rebounded spectacularly to 286.4 tonnes, the most since the first quarter of 2017, the WGC said.

But exchange traded funds (ETFs) storing gold mostly for large Western investors unloaded 177.9 tonnes, their largest disinvestment since the fourth quarter of 2013.

That selling dragged gold prices from a record high of $2,072.50 an ounce in August to around $1,700 in March, helping spur demand from Asian buyers who are often deterred by high prices, the WGC said.

ETF selling has slowed sharply in April and gold prices have pushed back towards $1,800. WGC analyst Krishan Gopaul said both consumer and investment demand would likely remain solid this year, though below recent peaks.

Central banks in the first quarter bought 95.5 tonnes of gold, the most since the second quarter of 2020 but significantly less than was typical during 2018 and 2019, the WGC said.

GOLD DEMAND (T)*

Q1 2021

Q4 2020

Q1 2020

Month on month % change

Year on year % change

Jewellery

477.4

510.9

313.2

-7%

52%

Technology

81.2

84.0

72.9

-3%

11%

Investment

161.6

139.5

549.6

16%

-71%

- Bar and coin

339.5

269.4

250.5

26%

36%

- ETFs & similar products*

-177.9

-130.0

299.1

37%

-159%

Central banks & other inst.

95.5

79.3

124.1

20%

-23%

TOTAL DEMAND

815.7

813.7

1,059.9

0%

-23%

* Source: World Gold Council, Gold Demand Trends Q1 2021

Global gold demandhttps://tmsnrt.rs/3u4Ktll

Gold demand: China and Indiahttps://tmsnrt.rs/3gM7Z2U

ETF gold holdingshttps://tmsnrt.rs/3dXzYKT

(Reporting by Peter Hobson Editing by Sonya Hepinstall)

((Peter.Hobson@thomsonreuters.com; +44 207 542 0083;))

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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