Q3 Gold Demand Was Lowest Since Q3 2009, Covid Takes A Toll

Demand for gold dropped to 892.3 tonnes for the third quarter ending Sept 30, 2020, to its lowest quarterly total since Q3 2009 - as consumers and investors continued to battle the effects of the global pandemic, the World Gold Council (WGC) has said.

At 2,972.1 tonnes year-to-date (y-t-d) demand is 10% below the same period of 2019.

"Although jewellery demand improved from the Q2 record low, the combination of continued social restrictions, economic slowdown and a strong gold price proved onerous for many jewellery buyers: demand of 333 tonnes was 29% below an already relatively anaemic Q3 2019," the WGC stated.

According to it bar and coin demand strengthened, gaining 49% y-o-y to 222.1 tonnes.

"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. Q3 also saw continued inflows into gold-backed ETFs, 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 flows to a record 1,003.3 tonnes.

Central banks generated small net sales of gold in Q3, the first quarter of net sales since Q4 2010. Sales were generated primarily by just two central banks - Uzbekistan and Turkey - while a handful of banks continued steady albeit small purchases.

Demand for gold used in technology remained weak in Q3, down 6% y-o-y at 76.7 tonnes. But the sector saw a decent quarterly improvement as some key markets emerged from lockdown.

The total supply of gold fell 3% y-o-y in Q3 to 1,223.6 tonnes, despite 6% growth in gold recycling, with mine production still feeling the effects of the H1 COVID-19 restrictions," the World Gold Council has stated.