Despite the lockdown and massive drop in consumer demand, gold demand has held, with a modest 1 percent growth to 1,083 tons, driven primarily by investment demand.
Amid global uncertainty and market volatility, the past quarter has seen a seven-fold year-on-year increase in gold-backed ETF holdings, which reached a record 3,185 tons, according to the World Gold Council's «Gold Demand Trends Q1 2020» report, released Thursday.
These investment inflows have helped push the U.S. dollar gold price to an eight-year high, and global gold demand in value terms reached $55 billion – the highest since Q2 2013, according to the report.
At the same time, with prices high, the pandemic has hit consumer demand hard, with quarterly demand for jewelry and technology reaching new lows, dropping 39 percent year-on-year to 325.8 tons, and 8 percent year-on-year to 73.4 tonnes, respectively.Lockdown measures in China, the world's largest market for gold jewelry, prompted a 65 percent fall in demand.
Safe Haven
«Investor demand tends to offset any drop in consumer demand,» explained Andrew Naylor, the Singapore-based director of Central Banks and Public Policy, World Gold Council, in an interview with finews.asia.
«In this kind of environment, there will be continued interest in gold on the investment side, particularly as a safe haven and source of liquidity,» Naylor said. «We're not in a normal situation and won't be for along time.»
Further Gains Expected
Gold has rallied some 15 percent since mid-March, when its price experienced a slight dip to $1,471/oz. – its lowest this year.
UBS analysts Joni Teves and Giovanni Staunovo said in a press briefing on Wednesday that it will likely push $1,800/oz. in the coming weeks, as high levels of uncertainty and negative real rates of interest make it an attractive diversifier and hedge against risk.
