(Kitco News) – Physical demand for gold – consisting of jewelry, industrial uses, central-bank purchases and retail buying of bars and coins – fell by 26% year-on-year to 753 metric tons in the first quarter, the lowest level since 2009, as high prices led the drop in consumption, said Refinitiv Thursday.
Nevertheless, demand from professional investors for a safe haven picked up during the quarter, and the average gold price rose, with exchange-traded-product holdings jumping by 687% year-on-year to 300 tons, said GFMS team at Refinitiv.
Analysts said they see more gains for the yellow metal, saying could could challenge $1,800 an ounce this year.
Refinitiv described gold prices as volatile in the first quarter, posting gains during the first two months before selling off in March when the metal was pulled down by a sell-off across global stock markets. Gold then bounced back and ended up averaging $1,582 an ounce for the quarter, which was up by 7% from the previous three months and up 21% year-on-year.
“Looking ahead, gold may remain vulnerable to further losses in the short term, particularly should the COVID-19 crisis continue to deteriorate in the West and if we see another meltdown in equity markets, which would lead to yet another bout of liquidation across all asset classes, including gold,” said Cameron Alexander, manager of precious-metals research at Refinitiv.
“Having said that, with heightened uncertainty and expectations of the global economic recession, unprecedented levels of stimulus from central banks around the world and interest rates remaining at historically low levels and in negative territories, we believe that gold will rebound to even higher levels. We forecast gold to average $1,637/oz in 2020, with a possibility to test and move beyond $1,800/oz later in the year.”
The firm said jewelry-fabrication volume, which typically accounts for around 55% of total physical demand, slumped 40% year-on-year during the January-March period to 309 tons. The biggest losses were in Asia, with a 43% year-on-year decline.
China’s jewelry-fabrication demand tumbled 62% due to the COVID-19 pandemic, which shut down the economy, Refinitiv said. India’s fabrication demand fell 34% from the same period a year ago, hurt by record high gold prices in the country’s currency even before a government-mandated lockdown in late March, the firm said.
First-quarter demand for gold used in industrial applications fell 19% to 75 tons, analysts said. Official sector net purchases dropped by 11% year-on-year to 129 tons.
Meanwhile, the bulk of the first-quarter 300-ton build in ETP holdings took place in March, Refinitiv said. This was aided by a price correction and pick-up in safe-haven demand due to the spread of the COVID-19 pandemic and fears of a global economic recession. Total ETP holdings rose to a fresh high of over 3,000 tons by the end of the quarter, the firm added.
However, coin and bar retail investment fell by 11% year-on-year in the first quarter to 240 tons, led by a 21% drop in physical bar investment to 151 tons, Refinitiv said. This demand in Asia fell by 67% from the same period in the prior year.
Demand in China and India for physical bars fell by 53% and 49%, respectively, hurt by an economic slowdown, high gold prices and a lockdown in China, which brought business activity and consumption to a standstill, Refinitiv said. The picture was the opposite in Western nations, however, as a surge in safe-haven demand meant bar demand more than doubled in Europe and was up 21% in North America.
Refinitiv described a mixed picture for supply. Mine production increased by 3% year-on-year to an estimated 842 tons, analysts said, but scrap flows slipped by 2% to 299 tons. The latter was impacted by COVID-19 restrictions, with China’s shutdowns leading to a drop in scrap volume of more than 40%, Refinitiv said. However, with the gold price in Indian rupee rising to fresh highs, scrap supply there soared by 29%, offsetting some of the decline in Chinese flows.
TORONTO – Canada’s main stock index was down more than 200 points in late-morning trading, weighed down by losses in the technology, base metal and energy sectors, while U.S. stock markets also fell.
The S&P/TSX composite index was down 239.24 points at 22,749.04.
In New York, the Dow Jones industrial average was down 312.36 points at 40,443.39. The S&P 500 index was down 80.94 points at 5,422.47, while the Nasdaq composite was down 380.17 points at 16,747.49.
The Canadian dollar traded for 73.80 cents US compared with 74.00 cents US on Thursday.
The October crude oil contract was down US$1.07 at US$68.08 per barrel and the October natural gas contract was up less than a penny at US$2.26 per mmBTU.
The December gold contract was down US$2.10 at US$2,541.00 an ounce and the December copper contract was down four cents at US$4.10 a pound.
This report by The Canadian Press was first published Sept. 6, 2024.
TORONTO – Canada’s main stock index was up more than 150 points in late-morning trading, helped by strength in technology, financial and energy stocks, while U.S. stock markets also pushed higher.
The S&P/TSX composite index was up 171.41 points at 23,298.39.
In New York, the Dow Jones industrial average was up 278.37 points at 41,369.79. The S&P 500 index was up 38.17 points at 5,630.35, while the Nasdaq composite was up 177.15 points at 17,733.18.
The Canadian dollar traded for 74.19 cents US compared with 74.23 cents US on Wednesday.
The October crude oil contract was up US$1.75 at US$76.27 per barrel and the October natural gas contract was up less than a penny at US$2.10 per mmBTU.
The December gold contract was up US$18.70 at US$2,556.50 an ounce and the December copper contract was down less than a penny at US$4.22 a pound.
This report by The Canadian Press was first published Aug. 29, 2024.
The crypto market has recently experienced a significant downturn, mirroring broader risk asset sell-offs. Over the past week, Bitcoin’s price dropped by 24%, reaching $53,000, while Ethereum plummeted nearly a third to $2,340. Major altcoins also suffered, with Cardano down 27.7%, Solana 36.2%, Dogecoin 34.6%, XRP 23.1%, Shiba Inu 30.1%, and BNB 25.7%.
The severe downturn in the crypto market appears to be part of a broader flight to safety, triggered by disappointing economic data. A worse-than-expected unemployment report on Friday marked the beginning of a technical recession, as defined by the Sahm Rule. This rule identifies a recession when the three-month average unemployment rate rises by at least half a percentage point from its lowest point in the past year.
Friday’s figures met this threshold, signaling an abrupt economic downshift. Consequently, investors sought safer assets, leading to declines in major stock indices: the S&P 500 dropped 2%, the Nasdaq 2.5%, and the Dow 1.5%. This trend continued into Monday with further sell-offs overseas.
The crypto market’s rapid decline raises questions about its role as either a speculative asset or a hedge against inflation and recession. Despite hopes that crypto could act as a risk hedge, the recent crash suggests it remains a speculative investment.
Since the downturn, the crypto market has seen its largest three-day sell-off in nearly a year, losing over $500 billion in market value. According to CoinGlass data, this bloodbath wiped out more than $1 billion in leveraged positions within the last 24 hours, including $365 million in Bitcoin and $348 million in Ether.
Khushboo Khullar of Lightning Ventures, speaking to Bloomberg, argued that the crypto sell-off is part of a broader liquidity panic as traders rush to cover margin calls. Khullar views this as a temporary sell-off, presenting a potential buying opportunity.
Josh Gilbert, an eToro market analyst, supports Khullar’s perspective, suggesting that the expected Federal Reserve rate cuts could benefit crypto assets. “Crypto assets have sold off, but many investors will see an opportunity. We see Federal Reserve rate cuts, which are now likely to come sharper than expected, as hugely positive for crypto assets,” Gilbert told Coindesk.
Despite the recent volatility, crypto continues to make strides toward mainstream acceptance. Notably, Morgan Stanley will allow its advisors to offer Bitcoin ETFs starting Wednesday. This follows more than half a year after the introduction of the first Bitcoin ETF. The investment bank will enable over 15,000 of its financial advisors to sell BlackRock’s IBIT and Fidelity’s FBTC. This move is seen as a significant step toward the “mainstreamization” of crypto, given the lengthy regulatory and company processes in major investment banks.
The recent crypto market downturn highlights its volatility and the broader economic concerns affecting all risk assets. While some analysts see the current situation as a temporary sell-off and a buying opportunity, others caution against the speculative nature of crypto. As the market evolves, its role as a mainstream alternative asset continues to grow, marked by increasing institutional acceptance and new investment opportunities.
