Gold investment demand down more than 40% in 2021, new report says


Global investment demand for gold suffered a decline of more than 40% in 2021, even as demand for bullion and coins hit an eight-year high and investment demand for the fourth quarter fell more than doubled, according to a World Gold Council report released Thursday. evening.

“Investment demand was mixed in an environment of opposing forces: high inflation competing with rising yields for investor attention,” the report said.

Total investment demand for gold, which includes bullion, coins and gold-backed exchange-traded funds, fell 43% to 1,007 metric tons last year. Within this segment, annual investment in bullion and coins rose 31% to 1,180 metric tons – an eight-year high, while global gold exchange-traded funds recorded outflows of 173 metric tons last year, a 5% drop in total holdings.

Total gold demand for the whole of 2021, which includes investment, jewellery, technology and central bank demand, increased by 10% to 4,021 metric tonnes, demand for gold in the fourth quarter rose nearly 50% to a 10-quarter high, according to the World Gold Council report.

“While the behavior of gold is often tied to a few recurring factors, such as interest rates or the dollar, the reality is that gold is multidimensional,” Juan Carlos Artigas, global head of gold, told MarketWatch. research at the World Gold Council. “Despite gold ETF outflows, overall demand rebounded, driven by robust growth in bullion and coins, technology, jewelry and central bank demand.”

“Despite gold ETF outflows, overall demand rebounded, driven by robust growth in bullion and coins, technology, jewelry and central bank demand.”

— Juan Carlos Artigas, World Gold Council

During the second half of last year, investment in bullion and coins “maintained good momentum as high rates of inflation across the globe kept investors focused on gold’s role in as an inflation hedge and a wealth protection asset,” according to the report. “Interest in gold bars and coins would have been almost entirely one-sided, with very limited resale activity.”

In the United States, bar and coin investors bought a record 117 metric tons of gold in 2021, with annual demand up 69%. The U.S. Mint also reported its strongest year of bullion sales since 2009, selling a combined total of 1.252 million ounces of gold in Eagle and Buffalo coins, according to the report.

Meanwhile, central banks hoarded 463 metric tons of gold last year, 82% more than in 2020. This took global gold reserves to a nearly 30-year high, a- he declared.

While prices for the precious metal fell 4% in 2021, the average price of $1,799 per ounce for the year was about 2% higher than in 2020.

“Last year was a good example of the dual nature of gold. Its performance in 2021 – 2% better on average compared to the previous year – reflects the multiple purposes of gold: from a key component of technology to a highly liquid investment hedge,” Artigas said.

On Thursday, gold prices on the futures market stabilized lower, with the February contract GCG22,
at $1,793.10 an ounce, the lowest finish in about three weeks. April or GCJ22,
which became the most active, settled at $1,795.


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