Demand for gold reaches its lowest in 10 years

The global demand for gold has dropped to 892.3 tonnes in the third quarter of the year reaching its lowest quarterly since 2009.

As investors and consumers continue to fight against the novel coronavirus pandemic, the demand is below 10 percent compared to the same period of 2019.

Despite the increasing demand for gold in the jewellery sector this quarter, the effects of social restrictions, economic slowdown and a strong gold price proved onerous for many buyers. 

The demand for gold jewellery was 333 tonnes in Q3, which is 29 percent below from the same period of the last year.

In contrast, the demand for gold bars and coins has increased.

“Much of the growth was in official coins, due to continued strong safe-haven demand in Western markets and Turkey, where coins are the more prevalent form of gold investment,” the World Gold Council’s report wrote.

This third quarter also saw “continued inflows into gold-backed exchange-traded funds(ETF),” although at a slower pace than in the first half.

“Investors globally added 272.5t to their holdings of these products, taking y-t-d(Year-to-date) flows to a record 1,003.3t.”

World central banks have made net sales of gold in the third quarter, marking the first quarter of net sales since Q4 of 2010.

“Sales were generated primarily by just two central banks – Uzbekistan and Turkey – while a handful of banks continued steady albeit small purchases.”

On the other hand, the demand for gold used for technology continued low in Q3, decreasing 6 percent compared to the same period of last year at 76.7t.

That said, the technology sector demand for gold saw a decent quarterly improvement due to the emergence of some key markets from the lockdown measures around the world.

Gold recycling rose 6 percent in Q3, though the mining sector still felt the negative effects of the Covid-19 which caused billions of dollars of economic damages for the world.

Gold price increasing against dollar

Gold rose on Friday following two straight sessions of sharp declines as a rally in the dollar stalled, prompting some investors to seek refuge in bullion after rising Covid-19 cases and the upcoming U.S. elections kept markets on edge.

Spot gold rose 0.4 percent to $1,875.14 after shedding as much as 1 percent on Thursday. US gold futures rose 0.4 to $1,875.50.

Fresh coronavirus-led lockdowns in Europe and surging cases in the U.S. weighed on equity markets.                   

Commerzbank analyst, Eugen Weinberg, said the higher liquidity offered by the European Central Bank, which has committed to take new action in December to ease the economic blow, also supported gold.