Peter Hobson

LONDON (Reuters – The global demand for gold rose by 10% but remained far below that of COVID-19, due to slack investor interest, according to the World Gold Council (WGC), in a Friday report.

The WGC reported that a record number of people bought jewellery in 2021, pushing demand to the top since April-June 2019 and causing the fourth quarter’s highest levels ever recorded.

The central banks’ gold buying rebounded in 2013 and their purchases of small coins and bars were up compared to 2013. But, exchange-traded fund investors sold less bullion that they bought last year. That led to weakening global demand.

The total demand for gold was 4,021 tonnes in 2021, an increase of 3,659 tonnes in 2020 and well below the 4,440-tonne average in the 2010s.

Pandemic 2020 led to a decline in jewelry sales, which prompted stockpiling among investors looking for a place to save their wealth. This was reversed when economic growth improved, which boosted consumer spending but weakened investor appetite.

(Graphic: Global gold demand, https://fingfx.thomsonreuters.com/gfx/ce/lbvgnwnwjpq/WGC%20GDT%20Q4%202021.JPG)

The price of gold has dropped from records highs at above $2,000 per ounce in the 2020 investment frenzy to $1,800. Most analysts predict that prices will trend lower.

The WGC stated that “investment in gold” may be difficult by 2022 due to competing forces. They pointed out rising interest rates, which increase returns on assets such as bonds, which compete with gold. High inflation could also fuel bullion demand, which is used as an inflation hedge.

WGC stated that it anticipated strong demand for coins, jewellery and small bars in 2022. It also said central banks would continue to buy gold “but at a slower pace” than they did in 2021.

According to the WGC, jewelry fabrication increased by 67% in 2021 from 2020 at 2,221 tons, which is the largest increase since 2018. At 713 tonnes, the fourth quarter’s demand was the most since 2013.

The number of small-investors who bought bars and coins soared 31% to 1,180 tonnes, an eight year high.

The central banks purchased 463 tonnes gold in 2021. This is an increase of 255 tonnes in 2020, but less than the 600 tonnes that were bought in 2018 or 2019.

Following a record 874 tonnes accumulation in 2020, the exchange-traded funds had their holdings reduced by 173 tonnes in 2021.

Here are the numbers and some comparisons.

ANNUAL GOLD DEMAND (T)*

2020 2021 % Change

Fabrication of jewellery 2,220.9 1,327.4 67%

2133.6 1401.1 52%

Inventory of Jewellery 97.3 -73.7. -232%

Technology 330.2 302.8 9%

– Electronics 272.0 249.3 9%

Other Industries 46.8 41.6 12.

Dentistry 11.4 111.9 -4%

1,007.1, 1,773.6 -43%

– Coin and bar 1,180.4 899.6 31%

– ETFs & similar products -173.3 874.0 -120%

Central banks & other inst. 463.1 255.0 82%

TOTAL DEMAND 3,021.3,658.8 10%

QUARTERLY GOLD DEMAND (T)*

Q4 2021 Q3 Q4 m-o-m y-o-y

2021 2020 % %

The pace of change is changing

Fabrication of jewellery 713.0 514.2 475.8 39% 47%

Jewellery 7112.7472.2 510.2 41%

Consumption

– Inventory for Jewellery: 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 12.5 111.6 11.8 8.8%

– Dentistry 2.2.8.2.9 -4%. -7%

Investment 300.2 235.0 138.0 28% 18%

– Coin and bar 317.8 261.5 269.2 18%

– ETFs & similar -17.6 -26.5 -131.2 -34% -87%

47.7 91.4 61.0 Central banks -48% and -22%

TOTAL DEMAND 1,146.8 954.1 768.3 49%

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