Global demand for gold in the first quarter fell from a year ago due to a more than 70% year-on-year decline in gold investments, according to a World Gold Council report released Thursday. Total global gold demand for the quarter was 815.7 metric tons, down 23% compared to the first quarter of 2020, although it was “on par” with the fourth quarter of 2020, according to the report.
The investment segment of gold demand fell 71% year-on-year in the first quarter to 161.5 metric tons, as exchange-traded funds backed by gold posted outflows of 177.9 metric tons, compared to inflows of 299, 1 metric tons in the same period of the previous year. . However, the “bargain hunt” boosted investment in bars and coins 36% over the prior year to 339.5 metric tons, according to the report. “Lower gold prices and continued economic recovery in the first quarter of 2020 encouraged a very positive response from consumers, particularly as many countries saw continued gradual easing of lockdown restrictions,” said Louise Street, senior analyst at World Gold Council markets. The prices of the most active gold futures contract lost about 9.5% in the first quarter. The June GCM21 gold contract, + 0.62% closed at $ 1,773.90 an ounce on Wednesday from Comex, and is trading more than 6% lower so far this year. See: Why Gold’s Largest Quarterly Fall in 4 Years Doesn’t Mark the End of Its Bull Cycle Demand for gold bullion and coins also experienced a “strong recovery from last year’s pandemic-hit first quarter”, standing at the highest level since the fourth quarter of 2016, “as investors bought into falling prices,” Street said. “Growing concerns about inflation were also a determining factor, he added. Still, that positive response from the gold consumer was “offset by significant outflows of gold-backed ETFs after record inflows last year,” Street said. Gold-backed ETF outflows were “concentrated in Western markets, while the Asian fund posted net inflows, led by China.” Meanwhile, the jewelry segment of gold demand saw a 52% increase in the first quarter, compared to the previous year, to a total of 477.4 metric tons, according to the World Gold Council report. “India and China were the main drivers of this growth,” Street said. China’s demand for jewelry, in particular, more than tripled, rising 212% to 191.1 metric tons, the highest quarterly total since 2015, according to the report. It attributed the strong quarterly result to “improving domestic economic conditions, falling gold prices and booming sales triggered by Chinese New Year, Valentine’s Day and International Women’s Day.” The gold market also saw overall demand growth in the technology sector during the three months ending March 31, up 11% year-on-year to 81.2 metric tons, and electronics accounted for 13% of that increase, according to the report. Also see the global demand for silver about to increase this year; prices could rise more than 30%: report