Between marriages, inflation and technology, gold recovers from the pandemic

The demand for gold soared last year after the losses caused by the coronavirus pandemic in 2020, mainly in the last quarter thanks to the purchase of bullion as a refuge against inflation and jewelry for weddings in India and China.

The demand for the yellow metal in 2021 reached 4,021 tons, its highest level in two and a half years, with a jump of almost 50% year-on-year in the last three months of the year, according to the quarterly report of the World Gold Council (CMO). , published on Friday.

Coin and bullion buying is even at an eight-year high as the precious metal was sought after as inflation picked up in late 2021.

John Mulligan, spokesman for the CMO, notes “a strong recovery in the physical retail market, during that quarter but also in the year”, in particular in the market for jewelry, gold pieces and bullion .

Annual jewelry consumption rose 52% in 2021, fully recovering from the shocks of the pandemic.

Strong growth in Indian demand helped push the fourth-quarter world total to 713 tonnes of gold, the highest in almost nine years.

– Strong seasonal demand in India and China –

“The Indian and Chinese markets are very important from a seasonal demand point of view,” John Mulligan told AFP. “In India, the wedding season is crucial as millions of people get married and all these ceremonies usually involve some level of gold,” he continues.

Indian families transform part of their savings into ingots, necklaces, rings, bracelets and other gold objects, a supreme shelter value. With the covid-19 pandemic, “many of these marriages had to be canceled or postponed” and recovery only began at the end of the year last year, Mulligan continues.

In addition to weddings, Chinese consumers tend to buy gold products before the Lunar New Year, the most important holiday in the calendar.

Releasing this demand held back by the pandemic was a key factor, with jewelry purchases reaching 2,124 tonnes in 2021, “thanks to an exceptional fourth quarter” (713 tonnes), according to the World Gold Council.

– Gold and technology –

In 2021, the use of gold in the technology sector – the yellow metal found in the components of many electronic devices such as computers or mobile phones – increased 9% and reached 330 tons.

Central banks bought 463 tons of gold in 2021, 82% more than in 2020.

However, in the fourth quarter of 2021, central bank net purchases were 48 tonnes, the lowest level since the end of 2010, just after the global financial crisis.

A disaffection is reflected in the price of an ounce of gold, which fell more than 3.5% to finish at $1,829.

Annual demand recovered in almost all sectors, with the notable exception of ETFs, listed securities indexed to the price of the yellow metal, which recorded net annual outflows (173 tonnes).

Most of these outflows came from large US funds.

For John Mulligan, this phenomenon concentrated in the United States is explained by “a significant level of uncertainty and a signal directed at the market that is not yet clear.”

US investors are questioning “the state of the global economy, the recent downward revision of growth forecasts and the persistence of rising inflation”, which adds to the increase in rates, as announced by the Fed Federal (Fed) on Thursday.

In Europe, by contrast, ETFs have been flat, according to Council data.

emb / ved / eb / mab / js

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