Central banks shifted to net sellers for the first time in nearly a decade, with net sales estimated at just under 13 t for the third quarter, research from financial markets data company Refinitiv shows.
The shift was driven by an absence of purchases from Russia and China, as well as a significant rise in gross sales as countries continued the battle against Covid-19, which has taken a severe toll on the global economy, "with perhaps some also taking advantage of gold’s exceptional price performance in recent months", Refinitiv states.
Physical gold demand fell by 30% year-on-year, to 562 t in the third quarter as record high gold prices continued to take its toll on consumption.
Jewellery fabrication remained the worst affected segment, with global offtake contracting by 23% to a total of 314 t.
Despite many markets re-emerging from severe lockdown restrictions prevalent for most of the second quarter, demand remained poor across all the key regions. Countries continued to battle against the Covid-19 pandemic, which took a serious toll on the global economy, unemployment rates, household incomes and consumer demand.
Jewellery offtake in the world’s two largest gold consuming markets, China and India, dropped by 7% and 21%, respectively, battered by weak economic conditions, along with a record high gold price.
Gold averaged $1 909/oz in the third quarter, up 27% from the previous three months and 30% above the level seen over the same period of last year.
Refinitiv highlights that the rate of decline was less pronounced than the one seen in the prior two quarters as economies started to reopen after the lockdown.
Demand for gold in industrial applications recorded a 9% year-on-year drop in the three months to September, with double-digit percentage declines in dental and other industrial and decorative offtake.
However, demand from the electronics industry seems to have rebounded from the previous quarter, particularly from the automobile industry, as manufacturing resumed, although it remained some 9% down year-on-year.
For retail investment, which is the sum of physical bars and all coins, demand was marginally up year-on-year, as a strong rebound in official coin fabrication was largely offset by poor physical bar investment.
Official coin fabrication surged by 53% to nearly 72 t as fears around the Covid-19 crisis and the global market turmoil, along with the improved gold outlook, saw resurging interest among the retail investors, driving premiums to unprecedented levels.
Meanwhile, demand for gold bars slumped by 20% to just under 97 t, the lowest quarterly level since the financial crisis of 2008/9.
Reference: MiningWeek
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