In its recent update, the World Gold Council (WGC), suggested that the current demand increase could be explained by a fall in the price of gold after the record high levels seen in late summer 2020
Overall, the amount of gold jewelry acquired by global consumers has is seens to have gone up by some 477.4 tonnes (t) year-on-year for Q1 2021, which translates into an annual jump in value of 52%.
The WGC’s report on trending patterns in gold demand demonstrated that the price of gold fell by circa 10% during the first quarter of the year.
Meanwhile, overall world demand for gold held firm. In the previous quarter demand was at 815t. During the same period, analysts saw a 23% year-on-year fall in gold-backed exchange-traded funds (ETFs).
But, the view is that this fall off in demand for ETFs was “mitigated” by an increase in demand for bar and coins. This increased by over 35% year-on-year.
A senior market analyst at the World Gold Council commented that nations around the world continue to move forward from the pandemic their economies have also begun to gradually re-open.
In turn, this has caused an encouraging uplift in consumer confidence during the first quarter of the year, as reflected by the remarkable surge in demand for gold jewelry.
On the other hand, while many investors sought protection in gold from the original impact of Covid-19, this was mirrored by a sell-off in the gold price in the first quarter of the year, as markets saw a return to confidence in economic recovery and US interest rates rose sharply.
Overall the WGC’s view was that in spite of these ups and downs, gold has a strong place relative to well-balanced portfolios, especially with a risk of inflation on the horizon.