Global demand for gold fell to its lowest in 11 years in 2020 as the coronavirus upended the market, triggering huge stockpiling by investors but collapsing sales of jewellery and purchases by central banks, an industry report said on Thursday.
The pandemic also transformed the geography of the bullion trade, sucking gold from Asia, where most gold is sold as jewellery, to Europe and the United States, where investors are the dominant consumers.
It also pushed the value of gold up 25% in 2020, because investors have much more impact on prices than the jewellery market.
Global demand for gold fell to 3,759.6 tonnes last year, down 14% from 2019 and the first year below 4,000 tonnes since 2009, the World Gold Council (WGC) said in its latest quarterly report.
The year ended on a weak note, with demand over October to December at 783.4 tonnes, down 28% year-on-year and the lowest of any quarter since 2008, the WGC said.
Gold is traditionally used as a safe store of wealth, and investors bought 1,773.2 tonnes last year, up 40% from 2019 and the most for any year on record.
At current prices of around $1,850 an ounce, that gold is worth some $100 billion.
Exchange-traded funds (ETFs) holding gold for larger investors added a record 877.1 tonnes to their stockpile, but those inflows reversed late in the year as money flowed back to assets that benefit from economic growth.
Demand for gold bars and coins bought by smaller retail investors picked up pace towards the end of the year, lifting annual buying to 896.1 tonnes, up 3% from 2019.
Consumption of gold by jewellers – typically the biggest source of demand, dominated by China and India – fell to 1,411.6 tonnes as coronavirus lockdowns closed stores and put people out of work, while higher prices also curbed interest among buyers.
That was 34% lower than in 2019 and the lowest annual total on record, though demand was reviving by year-end, the WGC said.
Central banks bought 273 tonnes of gold in 2020, down 59% from 2019, with purchases falling sharply in the second half of the year.
Supply of gold fell 4% to 4,633 tonnes last year as the pandemic disrupted mining activity, the WGC said.