Physical gold demand in January-March 2020 declined by 26% compared to the same period of 2019 — up to 753 tons, the report says research and consulting company for precious metals markets Refinitiv GFMS. The index reached the lowest level since 2009.
Consumption of gold jewelry industry fell by 41% to 273 tonnes. Demand in China showed a sharp decrease by 62% yoy as a result of disruptions caused by COVID-19 and the complete stop of the economy. Demand in India has fallen by 34% on the back of record gold prices early in the quarter before the government at the end of March almost completely stopped the retail sale.
Retail demand for bars and coins fell 11% to 240 tonnes, including 151 ton ingots (-21%) and 89 tons of coins (+12%). The inflow into ETFs amounted to 300 tons in the first quarter to 38 tons a year earlier and 22 tons in the fourth quarter.
In January-March 2020 purchase of gold by banks (official sector) decreased by 11% to 129 tons.
Total supply of gold in the world for the first quarter rose 5% to 1,151 thousand tonnes, while production of primary gold has increased by 3% to 842 tons, while recycling was down 2% to 299 tons, global hejewa book increased by 9 tons to 25 tons a year earlier.
the Average price of gold in the first quarter of 2020 amounted to 1582 USD/ounce, which was higher than the same period a year earlier by 21%. The forecast average price for the year 2020 is us $ 1558/oz.
Cameron Alexander, Manager, division of research of the market of precious metals, Refinitiv, believes that in the short term, the risk of falling gold prices may persist.
"however, given the increased uncertainty and the anticipation of global economic recession, unprecedented levels of stimulus from Central banks around the world and keep interest rates historically low, including even negative values, we believe that gold will reach even higher levels. According to our estimates, in 2020 the average cost of gold is 1637 dollars/ounce, while later can be achieved and overcome the mark of $ 1,800 per ounce", — concluded the expert.
