Global consumer demand for gold jewellery surged 52 per cent year-on-year in the first quarter of 2021 amid a drop in bullion prices and global economic recoveries from the covid-19 pandemic, the World Gold Council said in its gold demand trends report published on Thursday.
According to the report, consumers bought 477.4 tonnes of gold during the period ending March 31, buoyed by strong demand for gold jewellery in China and India, leading consumers of the precious metal. Jewellery demand in China registered 191.1 tonnes during the period, a 212 per cent rise from the first quarter of 2020 while India’s demand totalled 102.5 tonnes, a year-on-year growth of 39 per cent.
The strong quarterly growth in China’s demand was due to improved domestic economic conditions, lower gold prices and sales booms buoyed by the Chinese New Year, Valentine’s Day and International Women’s Day, the World Gold Council said.
In India, substantial wedding purchases, boosted by declining gold prices and improving consumer sentiment “buoyed by a pick-up in economic activity, supported Indian gold jewellery demand in the first quarter”, the report explained.
Gold jewellery demand in the US recorded a six per cent year-on-year growth to 24.3 tonnes, its strongest first quarter figure since 2009 supported by the country’s vaccine rollout programme and federal income support measures, the report stated.
The first quarter also saw continued healthy levels of net buying by central banks with global official gold reserves growing by 95.5 tonnes.
On the other hand, gold demand in Europe fell eight per cent to 9.8 tonnes and was five per cent lower in the Middle East as a result of movement restrictions attributed to the covid-19 pandemic but market watchers are confident of demand recoveries having seen investors take more interest in gold from the initial impacts of Covid-19.
The increase in consumer demand, the World Gold Council said,was strengthened by the decline in the gold price from the record highs seen in the last quarter of 2020 where it sold above $1,900 per tonne. The yellow metal is currently sold around the $1,700 per tonne price having marked consecutive descents in the first quarter of 2021.
Commenting on demand prospects of gold in the rest of the year, Louise Street, senior markets analyst at the World Gold Council expressed optimism about the gold market, adding that its main drivers remain well supported.