The WGC, in its ‘Gold Demand Trends Q1 2020' report, notes that gold exchange-traded funds recorded the highest quarterly inflows for four years amid global uncertainty and financial market volatility. Holdings of these products reached a record high of 3185t by the end of the first quarter.
Other highlights included:
• These investment inflows helped push the US dollar gold price to an eight-year high. Consequently, global gold demand in value terms reached $55 billion - the highest since the second quarter of 2013. The price also reached new record highs in Indian rupees and Turkish lira, among others.
• The pandemic slashed jewellery demand as governments across the globe imposed lockdown measures. Demand fell to lowest on record, led by a 65% decline in China - the largest jewellery consumer and the first market to succumb to the outbreak.
• Central banks continued to amass gold, although we expect net buying to slow sharply. Amid heightened volatility and uncertainty, global gold reserves grew by 145t in the first quarter. But Russia announced that it would suspend its long-term buying programme from April, signalling a sharp slowdown in global net buying.
• Total first quarter supply fell 4% as coronavirus lockdowns hit mine production and gold recycling. Operations were halted at many projects in an attempt to stem the spread of the virus. The recycling of gold ground to a near standstill towards the end of the quarter as consumers were confined to their homes.
"The global pandemic fuelled safe-haven investment demand for gold, offsetting marked weakness in consumer-focused sectors of the market," the WGC said.