Gold demand fell at the end of 2019, but prices set to march higher: GFMS

LONDON (Reuters) – International demand for gold fell within the final three months of final yr as gross sales of gold jewellery, bars and cash declined alongside purchases by central banks and monetary traders, an business report stated on Thursday.

Central banks and traders had purchased massive quantities of gold earlier within the yr, serving to push gold costs up 18% in 2019 to the very best degree since 2013.

Gold is usually seen by traders as a protected funding throughout instances of political and financial uncertainty and turns into extra well-liked when rates of interest fall, as they did final yr.

Greater costs, nonetheless, brought on some patrons – notably retail customers in high markets China and India – to cut back their purchases, the Refinitiv GFMS Gold Survey stated.

Complete bodily demand for gold over October-December was 1,033 tonnes, down 9% from the identical interval in 2018, it stated.

Fabrication of gold jewellery fell 9% year-on-year within the fourth quarter to 509 tonnes, retail purchases of bars and cash have been down 7% at 297 tonnes and central financial institution shopping for was 18% decrease at 132 tonnes, in keeping with the report.

Alternate-traded merchandise holding gold on behalf of economic traders – which Refinitiv GFMS doesn’t classify as bodily demand – added 35 tonnes to their inventories, in contrast with 110 tonnes of additives in October-December 2018.

On the opposite aspect of the market, provide dipped 2% year-on-year within the fourth quarter to 1,185 tonnes, the report stated.

“Whereas demand from key Asian markets will probably stay weak this yr, ongoing central financial institution purchases and renewed investor curiosity will lend help for larger gold costs,” Refinitiv GFMS analysts stated.

“We due to this fact anticipate gold to common $1,558/ozin 2020, with a risk to check and transfer past $1,700/ozlater within the yr.”