PERTH (miningweekly.com) – Investment demand for gold is expected to compensate for falling consumer demand in 2020 as the Covid-19 pandemic impacted buyer habits, the World Gold Council (WGC) said on Wednesday.
Speaking at the International Mining and Resources Conference, WGC chief marketing strategist John Read noted that consumer demand, which makes up nearly 40% of total gold demand, had slumped during the first nine months of the year, with jewellery demand falling by 41% to 904 t during this period.
“This represents a larger decline than the one seen around the Global Financial Crisis,” Read said.
While high gold prices contributed to the fall in consumer demand, the main factor was the global lockdown owing to the pandemic, which Read said affected economies.
In terms of supply, mine production was down 5% in the year-to-date, owing to production interruptions from the pandemic, while recycling supply also fell in the first half of 2020.
“Although we are expecting an improvement in consumer demand in the second half of the year, and there are already signs of this happening in India and China, 2020 will be a poor year in consumer demand, and 2021 will also be lower than normal due to higher prices and still weak economics,” said Read.
“Supply will continue to recover over the next few quarters as interruptions decrease, and scrap recycling increases.”