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Gold Demand Trends Q1 2022

Gold market sees solid start to 2022

Q1 gold demand was 34% above Q1 2021, driven by strong ETF inflows

In a quarter that saw the US dollar gold price rise by 8%, gold demand (excluding OTC) increased 34% y-o-y to 1,234t – the highest since Q4 2018 and 19% above the five-year average of 1,039t.

The Ukraine invasion and surging inflation were key factors driving both the gold price and demand.

Gold ETFs had their strongest quarterly inflows since Q3 2020, fuelled by safe-haven demand. Holdings jumped by 269t, more than reversing the 174t annual net outflow from 2021.

Bar and coin investment was 282t in Q1, 20% lower than the very strong Q1’21 but 11% above its five-year quarterly average. Renewed lockdowns in China and historically high local prices in Turkey were key contributors to the y-o-y decline.

Jewellery consumption lost momentum in Q1: demand was down 7% y-o-y at 474t. The drop was largely due to softer demand in China and India.

Central banks added 84t to global official gold reserves during the first quarter. Net buying more than doubled from the previous quarter but fell 29% short of Q1’21.

The technology sector had a steady start to the year: demand of 82t was the highest for a first quarter since 2018, driven by a modest uptick in gold used in electronics.

 

Q1 gold demand increased y-o-y as strong ETF flows offset weaker jewellery and retail investment

Global quarterly demand by sector*

 

Highlights

The LBMA Gold Price PM gained 8% in Q1, its best quarterly performance since Q2 2020. The average quarterly price of US$1,877.2/oz was around 5% higher than in the first quarter of last year.

Gold mine production was 3% higher y-o-y at 856t. China resumed near-full production following safety-related closures, while higher grade ores were mined at various existing sites.

The supply of recycled gold jumped to 310t (+15% y-o-y). This was the strongest first quarter for gold recycling activity for six years.

After a strong start to Q1 in China, demand came to a virtual halt in March. Tough new lockdowns imposed to contain a resurgence of COVID-19 had a marked impact on demand for jewellery, bars and coins.

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