In its quarterly Global Demand Trends report, the WGC said that physical demand for the precious metal totaled 815.7 tonnes, virtually unchanged compared to the fourth quarter of 2020.
“Investment demand can have a significant influence on price, but also you shouldn’t completely, disregard what is happening in other parts of the market because that can create support for the price.
Artigas, said that the research shows global gold investment is shifting away from tactical positioning as investment flows out of gold-backed exchange traded funds.
“The support from renewed consumer demand has provided important support for gold, otherwise the price may have fallen further.
Looking at investment demand for physical bullion, the WGC said that consumers bought a total of 339.5 tonnes in the first three months of the year, up 36% compared to the first quarter of 2020.
“Outflows quickly mounted through the quarter as inflationary expectations – and, by extension, expectations of higher interest rates – were unleashed.
Although gold investment demand and in turn prices struggled in the first quarter of 2021, Artigas said that the market can still bounce back fairly quickly.
However, the WGC said that while jewelry demand has improved it still has a long way to go to get back to pre-pandemic levels.
The third important pillar of support in the gold market remains central bank demand.
“Japan’s foreign reserves are held between the central bank and the Ministry of Finance, and this gold purchase has been transferred to the latter’s foreign reserves account.
Looking at the gold supply, the WGC said that the global supply of gold totaled 1,092 tonnes, up 4% compared to the first quarter of 2020.