Gold demand fell 7.1% in the third quarter of 2021 compared to the same period last year to 830.76 tons.
The foregoing was mainly due to the exit from holding exchange-traded funds (ETFs) overshadowing other sectors of demand between July and September.
Additionally, supply was down 3% year-on-year due to a significant drop in recycling.
The World Gold Council placed the demand for the precious metal in the third quarter of the year at 830.76 tons, a figure that represents 12.7% less than the demand in the immediately preceding quarter of 951.24 tons, as well as 7.1% less than the demand for the same period. from 2020 when it stood at 894.42 tons.
Ana Azuara, Raw Materials analyst at Banco Base, explained that “this year, with the economic reopening, although the economy is slowing down, there is still an improvement. Although the pandemic continues, the risks have diminished and therefore it is no longer necessary to look for refuge assets ”.
He added that “during the past year, due to the excess liquidity in the financial market, the demand for gold increased considerably, because it was necessary to protect against risk, and since gold is considered a refugee asset, its demand increased” .
The demand for gold ETFs went from 273.90 tons in 2020 to an output of 26.70 tons in this third quarter of 2021.
For its part, the demand for gold jewelry went from 332.90 to 442.60 tons this year, in bars and coins it went from 221 to 261.7 tons demanded in the same period.
Investment in bars and coins increased 18% year-on-year to 262 tonnes. Many investors took advantage of the sharp drop in the price of gold in August as a buying opportunity. Global gold ETF outflows of 26.7 tonnes had a disproportionate impact on the year-on-year change in gold demand, given strong inflows of 274 tonnes in the third quarter of 2020.
Central banks continued to buy gold, albeit at a slower pace than in recent quarters. Global reserves grew 69 tons in the third quarter and almost 400 in the year.
Falling price
The price of gold closed the third quarter of 2021 at 1,757 dollars per ounce, compared to 1,914.60 dollars at the end of September 2020, a drop of 8.23 percent.
However, during that period, the price of the precious metal reached a minimum of 1,682.90 dollars per ounce on March 8, 2020, which means that since then to date it has recovered 4.40 percent.
Ultra-lax monetary policy in the United States helped boost gold since the financial crisis of the late 2000s, as low rates lowered the opportunity cost of owning non-interest-bearing assets and inflationary fears increased demand for gold. coverage.
In addition, the Bank of England maintained interest rates on Thursday, frustrating investors’ expectations of a hike that would have made it the first of the world’s large central banks to increase revenues after the Covid-19 pandemic.
Challenges and opportunities
According to the World Gold Council, mining production has increased steadily throughout 2021 and this year’s total has risen 5%, but recycling has slowed significantly, contracting by more than 12% during the same period.
“The ongoing economic recovery will benefit jewelry and technology; investment should be supported by continuing inflationary fears, but relatively modest ETF flows compare negatively to record 2020 inflows. Central banks are poised for a year of above-average net purchases, ”the report read. agency report.
Ana Azuara specified that “if inflationary pressures continue as they have been up to now, it could probably be a factor that favors an increase in the demand for gold, because it is used as an asset to safeguard its value against inflation.”
He added that the pressures for gold will continue to be the monetary stances of the central banks, “how flexible or not will they remain, when there are increases in the interest rate that pushes the price of gold down and demand is reduced” .
On Thursday, gold prices rose to their best performance in three days, after the Fed and Bank of England announced that they are in no rush to raise rates.
The gold spot metal gained 1.3% to $ 1,791.71 an ounce, after falling to a three-week low on the eve.
Reference-www.eleconomista.com.mx