Contact us
CALL US NOW 1-888-GOLD-160
(1-888-465-3160)

Gold Demand Surges in First Quarter

  by    0   4

Gold demand surged to kick off the year, up 34% year-on-year in the first quarter of 2022.

Total demand came in at 1,234 tons in Q1. That was the highest quarterly demand since Q4 2018, according to the World Gold Council’s Gold Demand Trends report. Demand in the first quarter of this year was 19% above the 5-year average.

According to the WGC, surging inflation and the Russian invasion of Ukraine were key factors driving demand.

The price of gold was up 8% in Q1.

Gold inflows into ETFs charted their strongest quarterly number since the third quarter of 2020. Safe-haven demand fueled the 269-ton increase in ETF gold holdings. This more than reversed the 174-ton outflow from gold-backed funds in 2021.

Demand for gold coins and gold bars came in at 282 tons. That was 20% down from a very strong first quarter last year, but it was still 11% higher than the five-year quarterly average.

While physical investment gold demand in the US and Europe were both strong, China was key to explaining the y-o-y decline. A drop in Chinese demand for gold bars and coins due to new government COVID-19 lockdowns put a drag on physical gold investment in that country. Record gold prices in some currencies also resulted in profit-taking. This was particularly true in Japan and Turkey.

Softer demand in China and India also stalled the recovery in the gold jewelry market. Q1 demand was down 7% year-on-year, coming in at 474 tons.

Central banks added a modest amount of gold to their holdings in Q1. On net, central banks globally increased their gold reserves by 84 tons. This doubled the increase from Q4 but was 29% down from the first quarter of 2020. Several central banks made large sales in Q1, pulling the net increase lower.

Demand for gold by industry rose by 1% year on year. It was the best Q1 for industrial gold demand since 2018.

While the technology sector has recovered somewhat from the impact of the pandemic, COVID-related headwinds remain thanks to China’s draconian policies. Dozens of cities in China are under total or partial lockdown, with major industrial and financial hubs such as Shanghai impacted. China’s zero-COVID policy also coincided with the Chinese New Year holiday. According to the WGC, this will potentially impact the electronics supply chain throughout 2022. The war in Ukraine could also impact the global electronics market moving into the second quarter.

Looking ahead, the WGC says that with so many factors in play, it’s difficult to determine gold demand trends moving forward.

Jewelry and industrial demand could see deteriorating market conditions if the war in Ukraine continues.  But we could also see quickly improving conditions with a resolution of that conflict. It’s also hard to predict how governments will respond to any resurgence in COVID-19. More lockdowns would put additional drag on these sectors.

On the other hand, the World Gold Council says it expects investment demand to be higher this year than last year due to high inflation and geopolitical instability.

You can read the entire World Gold Council report HERE.

Why Buy Gold Free Report

Get Peter Schiff’s key gold headlines in your inbox every week – click here – for a free subscription to his exclusive weekly email updates.
Interested in learning how to buy gold and buy silver?
Call 1-888-GOLD-160 and speak with a Precious Metals Specialist today!

Related Posts

SchiffGold Exclusive: Utah State Representative Speaks on New Precious Metals Law

As the U.S. economy progresses toward monetary catastrophe, individual states are taking action to preserve and enable the use of sound money. Utah recently passed HB 348, which took effect in May and authorizes the state to invest a portion of its funds in precious metals. State Representative Ken Ivory sponsored the bill, and in […]

READ MORE →

Chinese Central Bank Halts Gold Acquisitions

China has called quits on its 18-month gold buying spree, causing precious metal prices to stumble this week as the world’s largest buyer unexpectedly closes its tab. In 2023, the People’s Bank of China purchased more gold than any of the world’s other central banks, swelling its reserves of the precious metal to more than […]

READ MORE →

What a China-Taiwan Conflict Could Mean for Semiconductors, Gold

American-made weapons will soon be bound for Taiwan, American lawmakers are telling Taiwanese President Lai Ching-te, sending shockwaves of uncertainty through electronics and metals markets this week.

READ MORE →

Which Central Banks Are Selling Gold?

Central bank gold buying has been a significant factor in the yellow metal’s spectacular run-up to new record highs. But with its recent small correction downward, it’s a good time to look at which central banks are selling — and why.

READ MORE →

Death of Iranian President Carries Gold, Copper to New Record Highs

Amid ongoing tension in the Middle East, Iranian President Ebrahim Raisi and the foreign minister have been confirmed dead Monday after a helicopter crash. The officials’ shocking demise casts additional investor doubt on a region already plagued by economic upheaval, with supply chain uncertainties fueling record-high metal prices this week.

READ MORE →

Comments are closed.

Call Now