MUMBAI: Global gold demand declined by 19 per cent during the July-September quarter to 892.3 tonnes, the lowest quarterly total since Q3 of 2009, due to coronavirus-induced disruption, World Gold Council (WGC) said in a report.
The total global demand during July-September 2019, stood at 1,100.2 tonnes, according to WGC's Q3 Gold Demand Trends' report.
Though the overall demand declined during the third quarter of this year, there was a significant growth in investment demand, the report said.
The overall investment demand grew by 21 per cent at 494.6 tonnes as investors globally bought 222.1 tonnes of gold bars and coins and an additional 272.5 tonnes through gold-backed ETFs (electronically traded funds).
Year-to-date, gold ETFs have increased their holdings by a record 1,003.3 tonnes, it added. In the third quarter of 2019, the overall investment demand stood at 408.1 tonnes, out of which 149.4 tonnes was for bars and coins and 258.7 tonnes for ETF.
However, the combination of continued social distancing restrictions in many markets, economic slowdown, and a record high gold price in many currencies weighed on jewellery buyers.
This led to a 29 per cent decline in jewellery demand to 333 tonnes, which has been already declining since the third quarter of 2019, when it was at 468.1 tonnes, the report pointed out.
"The impact of COVID-19 is still being felt in the gold market across the world. The combination of continued social restrictions in many markets, the economic impact of lockdowns, and all-time high gold prices in many currencies proved too much for many jewellery buyers. We believe that this trend will likely continue for the foreseeable future," Louise Street, Market Intelligence at the World Gold Council, commented.
However, she said that looking at the investor landscape, WGC saw further record inflows into gold-backed ETFs in the quarter under review.
It was equally encouraging to see gold's role as a safe haven for retail investors, as people continue to seek stability in volatile markets, she added.
Meanwhile, according to the report, Central banks generated modest net sales of 12 tonnes of gold during the quarter under review compared to 141.9 tonnes.
Buying gold by the Central banks continued at a moderate pace, driven by the need for diversification and protection amid the negative rate environment, it added.
The overall demand in the technology sector fell by 6 per cent year-on-year to 76.7 tonnes, an improvement from the 16 per cent year-on-year decline in the second quarter. The electronics sector recorded a minor fall in gold demand during the third quarter, dropping 6 per cent to 62.7 tonnes compared to 66.4 tonnes in the same period of last year.
Talking about the supply, the report said the total supply during July-September of 2020, declined by 3 per cent to 1,265.6 tonnes compared to 1,223.6 tonnes during the same period of 2019, as the industry continued to feel the effects of COVID-19 restrictions.
"Mines and refineries were not fully operational due to the restrictions to curb the spread of the pandemic. There were issues in logistics and delivery were not taking place. The disruptions were not fully taken care of leading to decline in supply," WGC managing director, India, Somasundaram PR said.
Recycled gold supply increased 6 per cent during the third quarter of this year, with recycling channels reopening as consumers and retailers emerged from lockdown.
On a year-to-date basis, total supply remained 5 per cent lower than the same period last year due to the disruption caused by the pandemic, it added.