Timid bullion investors spoil return of consumer demand for gold, says WGC

Band Peter Hobson

LONDON, January 28 (Reuters)Global demand for gold rose 10% last year but remained well below its pre-COVID-19 pandemic level amid weak investor demand, the World Gold Council said on Friday ( WGC) in a report.

A surge in jewelry purchases at the end of 2021 pushed fourth-quarter demand to its highest level since April-June 2019, the WGC said.

Central bank gold purchases rebounded last year and purchases of small bars and coins were the highest since 2013, but exchange-traded fund investors sold more bullion than they expected. bought some, which weakened aggregate demand.

Total gold demand in 2021 was 4,021 tonnes, down from 3,659 tonnes in 2020, but well below the 2010s average of around 4,440 tonnes.

In 2020, the pandemic caused a slump in jewelry sales but caused stockpiling by investors looking for a safe place to store their wealth. This reversed as economic growth resumed, boosting consumer spending and weakening investor appetite.

Gold XUA= has fallen from record highs above $2,000 an ounce during the 2020 investment frenzy to around $1,800 and most analysts expect prices to decline.

“Investment (in gold) may struggle in 2022 amid competing forces,” the WGC said, pointing to rising interest rates that are boosting returns on assets such as bonds that rival gold, and high inflation, which could fuel demand for bullion as an inflation hedge. .

The WGC said it expects demand for jewelry, small bars and coins to remain strong in 2022 and central banks to “continue to buy gold but at a slower pace. only in 2021”.

In 2021, jewelry manufacturing rose 67% from 2020 to 2,221 tons, the most since 2018, the WGC said. Fourth quarter demand, at 713 tonnes, was the strongest since the second quarter of 2013.

Purchases of bullion and coins favored by retail investors rose 31% last year to an eight-year high of 1,180 tonnes.

Central banks bought 463 tons of gold in 2021, compared to 255 tons in 2020 but below the more than 600 tons bought in 2018 and 2019.

Exchange-traded funds reduced their holdings by 173 tons in 2021 after accumulating a record 874 tons in 2020.

Here are some numbers and comparisons.

ANNUAL GOLD DEMAND (T)*

2021

2020

% cash

jewelry making

2,220.9

1,327.4

67%

– Jewelry consumption

2,123.6

1,401.1

52%

– Jewelry inventory

97.3

-73.7

-232%

Technology

330.2

302.8

9%

– Electronics

272.0

249.3

9%

— Other industrial

46.8

41.6

12%

– Dentistry

11.4

11.9

-4%

Investment

1,007.1

1,773.6

-43%

– Bar and piece

1,180.4

899.6

31%

– ETFs and similar products

-173.3

874.0

-120%

Central banks and other inst.

463.1

255.0

82%

TOTAL DEMAND

4,021.3

3,658.8

ten%

QUARTERLY GOLD DEMAND (T)*

Q4 2021

Q3 2021

Q4 2020

mom % change

% change year-on-year

jewelry making

713.0

514.2

485.2

39%

47%

– Jewelry consumption

712.7

472.2

510.2

51%

40%

– Jewelry inventory

0.3

42.0

-25.1

-99%

-101%

Technology

85.9

83.4

84.0

3%

2%

– Electronics

70.6

69.0

69.2

2%

2%

– Other industrial

12.5

11.6

11.8

8%

6%

– Dentistry

2.7

2.8

2.9

-4%

-seven%

Investment

300.2

235.0

138.0

28%

118%

– Bar and piece

317.8

261.5

269.2

22%

18%

– ETFs & similar

-17.6

-26.5

-131.2

-34%

-87%

Central banks

47.7

91.4

61.0

-48%

-22%

TOTAL DEMAND

1,146.8

924.1

768.3

24%

49%

*Source: World Gold Council, Gold Demand Trends Q4 2021

Global Gold Demandhttps://tmsnrt.rs/3ua0s4q

(Reporting by Peter Hobson; Editing by Edmund Blair)

(([email protected]; +44 207 542 0083;))

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