Pandemic coronavirus has dramatically changed the structure of demand for gold in the world. The jewelry industry in terms of falling sales of jewelry, especially in India and China, gold is almost not necessary. Professional investors amid expectations of rising inflation and global recession are actively increasing purchases. Among the buyers and the Central banks of several countries. The Bank of Russia has reduced the purchases, giving the opportunity to private business to sell gold for the currency in the global market.According to the world gold Council (World Gold Council, WGC), in the first quarter of 2020, supply of gold in the world market amounted to 1.1 thousand tons, which is 4% lower than in the first quarter of 2019. As the WGC explains, the functioning of many gold mining companies had been suspended in an effort to stop the spread of the epidemic. In addition to the end of the quarter the fall in demand led to a sharp reduction in recycled gold as consumers are forced to stay home.Quarantine measures have hit almost all the consumers of the metal. According to WGC, overall consumer demand has made for the quarter, 567 tons, which is 28% lower than a year ago. Hardest hit jewelry industry: global demand for gold jewelry fell by 39%, to a record low of 326 tons. The strongest demand for jewellery has fallen in China because of quarantine measures taken in the first quarter, it decreased by 65%. Indian demand fell by 41%, to 74 tonnes. “Chinese New year, which traditionally precedes the increased demand for buying gifts, too, fell into a period of quarantine, so people missed out purchasing for this holiday,”— said the head of the Directorate on operations with shares of BCS Global Markets Oleg Achkasov.However, the drop in industrial demand was offset by investment. According to WGC, total investment demand grew by 80% year on year, to 540 tons. The entire increase was due to ETFs, which increased investment in gold by almost 300 tonnes, bringing them to a record 3.18 million tons. In the first quarter of last year, the ETF only bought 40 tons of gold. Amid risks of a global recession and fears of rising inflation professional investors were left in this protective asset. However, demand from individual investors for bars and coins declined by 19%, to 150 tons. “Because of the value of the shipment usually buying of bars and coins is done not by post, but personally that was not possible during the quarantine,”— says Oleg Achkasov.In order to diversify risks, which are not only of financial nature, but also geopolitical, we increased the share zolotovskiy demand for the metal is preserved on the part of Central banks during the quarter they purchased 145 tonnes of gold, as in the previous year. Come the leaders of the Central Bank of Turkey, which in the quarter gained 72.7 per ton to 40 tons a year earlier. “The interest of many Central banks to the gold grows the first year as an alternative to dollar”,— said the head of conversion and interbank operations of Bank “Zenit” Alexander Karpov. The Bank of Russia has significantly reduced purchases during the quarter, he gained only 28 tons, almost twice less than a year ago. Moreover, in March, the Russian regulator has announced the cessation of gold purchases. “Gold is now popular enough on the world market, and this can lead to the fact that will increase export earnings and inflow of foreign currency to the Russian market”,— said at a briefing on 24 April, the head of the Central Bank Elvira Nabiullina.In the coming quarters, investment demand will remain the driving force of the market, the Director for interaction with Board members and markets, WGC John Mulligan. “After the lifting of restrictions, the demand from retail investors will also grow pretty quickly, since people will get access to physical gold, which was unavailable for most of the first quarter,” he said. At the same time, consumer demand for gold, especially jewelry, will face difficulties to restore purchasing power. This is especially true of China and India, where in the second quarter will be even restricted net demand for jewelry.Vitaly Gaydayev
