Gold markets are currently divided during the recent quarter.
In the second quarter of 2021, global gold demand slightly dipped from the same period last year, totalling 955.1 tonnes, according to the World Gold Council.
Despite this decline, the forecasted gold demand for investment products and jewelry in the full year 2021 shows a different trend compared to 2020. Investment demand for gold is expected to remain strong or increase, buoyed by private household purchases in Asia and ETF inflows.
The strong investment interest that marked 2020 continued into 2021, with global investment demand increasing by approximately 40% in 2020 compared to 2019. This trend is evident in the private investor demand for gold bars and coins in China, which hit a 12-year high in the first half of 2021. India also saw a rise in investment demand that helped offset declines in jewelry purchases.
On the other hand, jewelry demand was relatively stable or showed slightly weaker volume terms in 2021 compared to 2020. Notable declines were observed in China (down 28%) and India (down 20%) in the first half of 2021, despite an increase in value terms due to rising gold prices.
The World Gold Council forecasts jewelry demand for the full year to be between 1,600 to 1,800 tonnes. Despite regional softness in key markets, jewelry demand is expected to show resilience overall due to these price increases.
The second quarter of the year saw a rise in demand for bars and coins, totalling 156.7 tonnes, and a consumption of 390.7 tonnes in the jewelry industry. Central banks purchased 199.9 tonnes of gold in the same period.
Demand for physically-backed, exchange-traded gold products (ETCs) in the second quarter of the year amounted to 40.7 tonnes. It's worth noting that gold demand in the second quarter of the year was more than the first quarter of this year (878.0 tonnes).
The demand for investment products in the second quarter of the year was 284.5 tonnes. The World Gold Council forecasts investment demand for the full year to be between 1,250 to 1,400 tonnes.
These trends indicate a continued shift towards gold as a financial asset and investment in 2021, alongside evolving consumer behavior in jewelry driven by price sensitivity and income factors.
Other than the fluctuation in jewelry demand, real-estate investment in gold shows promising signs, with the forecasted investment demand for gold expected to remain strong or increase in 2021, as compared to previous years. This trend is reflected in the surge of private investor demand for gold bars and coins in various regions.
