Demand for gold sank in 2020 to the lowest level of 11 years due to a pandemic

Reuters - Global gold demand fell to its lowest level in 11 years in 2020 as the Covid-19 pandemic disrupted the market, causing investors to build huge inventories but It collapsed the sales of jewelry stores and central banks, an industry report said Thursday.

The pandemic has also transformed the geography of bullion operations, moving gold out of Asia, where most of the metal is sold as jewelry, and into Europe and the United States, where investors are the dominant consumers.

It also pushed the value of gold up 25% in 2020, as investors have a much bigger impact on prices than the jewelry market.

Global gold demand fell to 3,759.6 tons last year, down 14% from 2019 and the first year it has not exceeded 4,000 tons since 2009, the World Gold Council (WGC) said. English) in its most recent quarterly report.

The year ended on a weak note, with demand from October to December at 783.4 tons, a 28% year-on-year drop and the lowest level for any quarter since 2008, the WGC detailed.

Demand for gold plunged in 2020 to minimum level of 11 years due to pandemic

Gold is traditionally used as a safe haven of value and investors bought 1,773.2 tons last year, 40% more than in 2019 and the highest figure for any year on record.

At current prices of about $1,850 an ounce, that gold is worth about $100 billion.

Exchange-traded funds (ETFs) holding gold for large investors added a record 877.1 tons to their inventories, but those inflows reversed at the end of the year as the money returned to assets that benefit from economic growth.

Demand for gold bars and coins bought by retail investors gained strength towards the end of the year, taking annual purchases to 896.1 tons, an increase of 3% compared to 2019.

Consumption of gold by jewelry stores - which is usually one of the largest sources of demand, dominated by China and India - fell to 1,411.6 tons as the Covid-19 lockdowns forced the closure of stores and left many people out of work, while higher prices also dampened buyer interest.

That was 34% lower than in 2019 and the lowest annual total on record, though demand revived at the end of the year, the WGC said.

Central banks also bought 273 tons of gold in 2020, 59% less than in 2019, with a sharp drop in acquisitions in the second half of the year.

Gold supplies fell 4% to 4,633 tonnes last year as the pandemic disrupted mining activity, the WGC said.