Gold ETFs see inflows, jewellery takes a hit
Inflows via exchange traded funds rise sevenfold to 298 tonnes in January-March
- Gold investments in the form of gold backed exchange traded funds (ETFs) witnessed a huge jump in the first three months of 2020, even as jewellery demand took a significant hit on account of the global COVID-19 pandemic that led to lockdowns in most countries.
- As per the latest Gold Demand Trends report by the World Gold Council, global gold demand held firm in the first quarter of 2020 at 1,083.8 tonnes, a rise of 1% compared to the corresponding period last year.
Safe haven investment
- The global COVID-19 pandemic fuelled safe-haven investment demand for gold, with gold-backed ETFs attracting huge inflows (+298 tonnes) to push global holdings in these products to a record high of 3,185 tonnes.
- The consumer-focussed sectors of the market weakened sharply as jewellery demand was hit hard by the effects of the outbreak and quarterly demand dropped 39% to a record low of 325.8 tonnes.
Lows not seen before
- The central banks continued to buy gold, though at a much slower pace, as global gold reserves grew by 145 tonnes in the first three months of the current calendar year.
- Interestingly, Russia has announced it would suspend its long-term buying programme thereby signalling a slowdown in global net buying for the second quarter and beyond.
- On the price front, sharp investment inflows helped push the gold price in dollar terms to an eight-year high following which the demand in value terms reached $55 billion, the highest since the second quarter of 2013.
- Incidentally, the gold price reached a new record high in Indian rupees and Turkish lira, among others.