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Physical gold demand falls in 1Q; investment may fuel rally to $1,800/oz – Refinitiv

Physical demand for gold – consisting of jewelry, industrial uses, central-bank purchases and retail buying of bars and coins – fell by 26% year-on-year to 753 metric tons in the first quarter, the lowest level since 2009, as high prices led the drop in consumption, said Refinitiv Thursday.

Nevertheless, demand from professional investors for a safe haven picked up during the quarter, and the average gold price rose, with exchange-traded-product holdings jumping by 687% year-on-year to 300 tons, said GFMS team at Refinitiv.

Analysts said they see more gains for the yellow metal and could challenge $1,800 an ounce this year.

Refinitiv described gold prices as volatile in the first quarter, posting gains during the first two months before selling off in March when the metal was pulled down by a sell-off across global stock markets. Gold then bounced back and ended up averaging $1,582 an ounce for the quarter, which was up by 7% from the previous three months and up 21% year-on-year.

“Looking ahead, gold may remain vulnerable to further losses in the short term, particularly should the COVID-19 crisis continue to deteriorate in the West and if we see another meltdown in equity markets, which would lead to yet another bout of liquidation across all asset classes, including gold,” said Cameron Alexander, manager of precious-metals research at Refinitiv.

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