Dhe demand for gold bars and gold coins rose again significantly in the first three months of this year compared to the same period in the previous year. This emerges from figures from the industry organization World Gold Council, which the newsy received in advance. Accordingly, sales of physical gold to private investors rose again by 36 percent to 339.5 tons. In addition to the recently somewhat cheaper gold price, which many private investors used to buy, Louise Street from the World Gold Council in an interview with the newsy named one reason for the strong demand for bars and coins: the fear of many investors about inflation.
Last year, Germany was the second largest buyer of physical gold in the world after China. According to reports from dealers, this strong interest in this country continued in the first quarter of this year, the council said. Globally, it was the strongest quarter for physical gold demand since 2016.
On the other hand, there were significant outflows from securities that are backed by gold, such as exchange-traded index funds (“Exchange Traded Funds”, ETF). It is noticeable here that capital market rates have risen in America, said Street. Unlike private investors, institutional investors in the United States reacted strongly and shifted. The outflows from the ETFs between January and March around the world were equivalent to 177.9 tons. As a result, global gold demand overall remained at the level of the previous quarter and fell by 23 percent compared to the same quarter of the previous year.
The demand for gold jewelry recovered in part after the crisis shock of last year, the traded volume rose year-on-year by 52 percent to 477.4 tons. “This is a significant improvement over the extremely weak first quarter of 2020,” commented the World Gold Council.
Central banks also buy gold
The rise in consumer demand was boosted by the decline in the price of gold compared to its record high in August 2020, the gold experts said. The gold price fell by around 10 percent in the course of the first quarter. This, along with the global economic recovery, has strengthened the “procyclical elements of gold demand”.
The demand for gold for use in the technology industry increased 11 percent in the first quarter compared to the same period last year. The background is that consumer confidence continues to recover, said the gold experts. This technology demand of 81.1 tons was even just above the five-year average of 80.9 tons.
“As the global recovery continues, economies have started cautiously to reopen,” said Street. This will lead to an “encouraging return” in consumer confidence in the first quarter, which is particularly evident for gold in the steep rise in jewelry demand.
The central banks also bought net gold again in the first quarter, albeit less than in the same period last year. The gold reserves of central banks around the world have risen by 95.5 tons on balance. Hungary alone is said to be purchasing 63 tons. A stronger orientation of the central banks on gold can be observed in all of Eastern and Central Europe, said gold analyst Street. Poland and Serbia also bought gold. The aspect of a “safe haven” for the currency reserves plays a role here. Turkey, on the other hand, has parted with larger parts of its gold reserves.
The World Gold Council does not issue a gold price forecast. However, Street was confident that conditions for the gold asset class would remain favorable even after the pandemic. If interest rates stay low, people are afraid of inflation, and demand for jewelry continues to rise, the outlook for gold is not bad.