The World Gold Council report “Gold Demand Trends Full Year 2021”, published at the end of January 2022, shows that the last quarter of 2021 was marked by a significant recovery in gold demand. An increase of almost 50 per cent compared to the previous year’s quarter ensured that the total demand in 2021 was 10 per cent higher than in 2020. In view of the lateral gold price trend of last year, this can be seen as proof of the metal’s strength as a protection against inflation and store of value in the eyes of many investors.
Long-term oriented investors and central banks fuelled demand
With 463 tonnes of gold, central banks worldwide increased their purchases by 82 per cent compared to 2020, according to the World Gold Council. Global gold reserves thus reached a 30-year high. Demand for gold bars and coins grew by 31 per cent in 2021 compared to the previous year. The purchase of gold in jewellery form also increased by 52 per cent worldwide due to the economic recovery in many emerging markets, but also because of regionally strong inflation, e.g. in Turkey. The demand for gold funds and ETCs increased in Asia while remaining stable in Europe. On the US market, many investors focused on short-term profits divested their gold. As a result, despite a recovery in US demand in the last quarter of 2021, the last year registered outflows of 173 tonnes, which equals a decrease by 5 per cent.
Gold production slightly lower in 2021 despite increased mining
Although gold production from mining increased by 2 per cent last year, overall gold production fell by 1 per cent. The reason for this is the increasingly important gold recycling, even though it decreased by 11 per cent in 2021 – a consequence of the lockdowns in 2020 that limited the possibilities worldwide to sell old jewellery. In 2022 however, the supply of recycled gold should return to normal.