A rally started from early June and by September as the Federal Reserve shifted to cutting rates for the first time since the financial crisis, while US/China trade tensions and Brexit concerns increased. In the beginning of Q4, gold lost some of its previous gains, but in December, gold rebounded by 4%, finishing the month at $1,523/oz as investors repositioned ahead of 2020.
Annual gold demand was boosted by a significant rise in investment flows into ETFs and similar products used as ‘safe haven’ assets. Gold-backed ETFs saw an inflow of 401 tonnes (9% of the total gold demand) compared to 76 tonnes in 2018. ETF holdings totaled 2,886 tonnes by the year-end.
On the contrary, investment in gold bars and coins dropped 20% year-on-year to 871 tonnes. Most of the decline came from a sharp downturn in the two largest markets: China and India.
Central banks were net buyers for the tenth consecutive year. The three largest purchases:
- Turkey (+159 tonnes)
- Russia (+158 tonnes)
- Poland (+100 tonnes)
Overall, total central bank demand comprised 650 tonnes, the second highest level of annual purchases for 50 years after 2018.
Full-year gold demand in the technology sector fell by 2% year-on-year to 327 tonnes as 2019 was a weaker year for the whole electronics industry.
Jewellery demand declined by 6% to 2,107 tonnes affected by the steep rise in the gold price in the second half of the year, which decreased affordability.
The total annual gold demand increased by 1% year-on-year to 4,356 tonnes.
Global gold supply in 2019 was up 2% year-on-year to 4,776 tonnes.
A 1% decline in mine production was offset by an 11% growth in recycled gold supply which totaled 1,304 tonnes spurred by price dynamics.