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Global gold demand dropped by 19% y-o-y to 892 t in Q3, as consumers continued to feel the impact of the COVID-19 pandemic.

This was the lowest quarterly total since Q3 2009. The year-to-date demand of 2,972.1 t was 10% lower versus the same period in 2019, according to the World Gold Council’s latest Gold Demand Trends report.

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While overall demand declined, Q3 saw significant growth in investment demand which rose by 21% y-o-y. Investors globally bought 222.1 t of gold bars and coins and an additional 272.5t through gold-backed ETFs.

Year-to-date, gold ETFs have increased their holdings by a record 1,003.3 t.

However, the combination of continued social distancing restrictions in many markets, the economic slowdown, and a record high gold price in many currencies proved too much for many jewellery buyers.

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Demand declined by 29% y-o-y at 333t, down from an already relatively anaemic Q3 2019.

Quarterly inflows of 272.5 t took global holdings of gold-backed ETFs (gold ETFs) to a new record of 3,880 t.While the pace slowed a little from H1, sustained inflows throughout Q3 demonstrate the continued motivation of ETF investors to add to their holdings.

The US dollar gold price rose to a record high of US$2,067.15/oz in early August.

This was followed by a pullback with the price closing the quarter around US$1,900/oz. Record high prices were also seen in various other currencies, among them the rupee, the yuan, the euro, and sterling.

Bar and coin investment jumped to 222.1 t in Q3 – up 49% y-o-y. Most major retail investment markets saw strong growth. The largest volume increases were seen in western markets, China, and Turkey, in contrast with continued significant sales in Thailand.

The effects of the pandemic further impacted the jewellery sector.The weakness caused by COVID-19 was compounded by record gold prices: Q3 demand fell 29% y-o-y to 333t. While China and India accounted for the largest volume declines, weakness was global.

Central banks generated modest net sales of 12t of gold in Q3. This was the first quarter of net sales since Q4 2010, primarily due to concentrated sales by two banks. Buying continues at a moderate pace, driven by the need for diversification and protection amid the negative rate environment.

Louise Street, Market Intelligence at the World Gold Council, comments:

“The impact of COVID-19 is still being felt in the gold market across the world. The combination of continued social restrictions in many markets, the economic impact of lockdowns, and all-time high gold prices in many currencies proved too much for many jewellery buyers. We believe that this trend will likely continue for the foreseeable future.

“However, looking to the investor landscape we saw further record inflows into gold-backed ETFs in Q3, taking the global total to a record high. It was equally encouraging to see gold’s role as a safe-haven for retail investors shine through this quarter, as people continue to seek stability in volatile markets.”

The Gold Demand Trends Q3 2020report, which includes comprehensive data provided by Metals Focus, can be viewed here.