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Bullion-shy traders spoil gold’s shopper demand comeback, WGC says By Reuters

© Reuters. FILE PHOTO: Gold bullion is displayed at GoldSilver Central’s workplace in Singapore June 19, 2017. REUTERS/Edgar Su/File Photograph

By Peter Hobson

LONDON (Reuters) – International demand for gold rose 10% final yr however remained properly under its stage earlier than the COVID-19 pandemic amid slack investor demand, the World Gold Council (WGC) stated in a report on Friday.

A surge in jewelry purchases on the finish of 2021 pushed demand within the fourth quarter to the best stage since April-June 2019, the WGC stated.

Gold shopping for by central banks rebounded final yr and purchases of small bars and cash had been the best since 2013, however traders in exchange-traded funds offered extra bullion than they purchased, weakening total demand.

Whole demand for gold in 2021 was 4,021 tonnes, up from 3,659 tonnes in 2020 however properly under the typical in the course of the 2010s of round 4,440 tonnes.

In 2020, the pandemic precipitated a collapse in jewelry gross sales however prompted stockpiling by traders looking for a protected place to retailer wealth. That reversed as financial progress recovered, boosting shopper spending and weakening investor urge for food.

(Graphic: International gold demand, https://fingfx.thomsonreuters.com/gfx/ce/lbvgnwnwjpq/WGCpercent20GDTpercent20Q4percent202021.JPG)

Gold has fallen from document highs above $2,000 an oz. in the course of the funding frenzy in 2020 to round $1,800 and most analysts anticipate costs to development decrease.

“Funding (in gold) could battle in 2022 amid competing forces,” the WGC stated, pointing to rising rates of interest which carry returns on belongings like bonds that compete with gold, and excessive inflation, which may gas demand for bullion as an inflation hedge.

The WGC stated it anticipated demand for jewelry, small bars and cash to stay robust in 2022 and for central banks “to proceed shopping for gold however at a slower tempo than in 2021.”

In 2021, jewelry fabrication rose 67% from 2020 to 2,221 tonnes, essentially the most since 2018, the WGC stated. Fourth quarter demand, at 713 tonnes, was the strongest for the reason that second quarter of 2013.

Purchases of bars and cash most popular by small traders rose 31% final yr to an eight-year excessive of 1,180 tonnes.

Central banks purchased 463 tonnes of gold in 2021, up from 255 tonnes in 2020 however under the greater than 600 tonnes purchased in 2018 and 2019.

Change traded funds shrank their holdings by 173 tonnes in 2021 after accumulating a record-breaking 874 tonnes in 2020.

Following are numbers and comparisons.

ANNUAL GOLD DEMAND (T)*

2021 2020 % change

Jewelry fabrication 2,220.9 1,327.4 67%

– Jewelry consumption 2,123.6 1,401.1 52%

– Jewelry stock 97.3 -73.7 -232%

Know-how 330.2 302.8 9%

– Electronics 272.0 249.3 9%

— Different Industrial 46.8 41.6 12%

– Dentistry 11.4 11.9 -4%

Funding 1,007.1 1,773.6 -43%

– Bar and coin 1,180.4 899.6 31%

– ETFs & comparable merchandise -173.3 874.0 -120%

Central banks & different inst. 463.1 255.0 82%

TOTAL DEMAND 4,021.3 3,658.8 10%

QUARTERLY GOLD DEMAND (T)*

This fall 2021 Q3 This fall m-o-m y-o-y

2021 2020 % %

change change

Jewelry fabrication 713.0 514.2 485.2 39% 47%

– Jewelry 712.7 472.2 510.2 51% 40%

consumption

– Jewelry stock 0.3 42.0 -25.1 -99% -101%

Know-how 85.9 83.4 84.0 3% 2%

– Electronics 70.6 69.0 69.2 2% 2%

– Different Industrial 12.5 11.6 11.8 8% 6%

– Dentistry 2.7 2.8 2.9 -4% -7%

Funding 300.2 235.0 138.0 28% 118%

– Bar and coin 317.8 261.5 269.2 22% 18%

– ETFs & comparable -17.6 -26.5 -131.2 -34% -87%

Central banks 47.7 91.4 61.0 -48% -22%

TOTAL DEMAND 1,146.8 924.1 768.3 24% 49%

* Supply: World Gold Council, Gold Demand Traits This fall 2021

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