In the face of the coronavirus crisis, investors are turning to gold as a safe-haven asset. The metal is reacting to the upside, which has led it to reach its maximum price in the last seven and a half years. Given this situation, it is time to review how gold demand was distributed in 2019 and what changes there may be in 2020.
The HowMuch website has published an exciting infographic these days. It perfectly displays how the demand for gold was distributed among the various sectors during the past year.
In this infographic, five main sources of gold demand are presented during 2019:
- Jewellery: 2,107 tons ( 48.37% of the total)
- Physical investment (bullion and coins): 870.6 tons ( 19.99% )
- Central banks and other institutions: 650.3 tons ( 14.93% )
- Investment (ETFs): 401.1 tons ( 9.21% )
- Technology: 326.6 tons ( 7.5% )
Almost half of the demand last year was monopolized by the jewellery sector, which uses gold as a raw material to create its pieces.
However, a slowdown is expected in the jewellery sector this year, as it has happened during the 2008 recession.
The part of demand that the jewellery sector is going to stop absorbing will be distributed among other industries, particularly the investment and financial institutions.
Investment demand in physical gold in 2019, that is, bullion and coins, equalled almost 20% of the total market.
Based on the indications, everything points to the fact that during 2020, the investment sector will grow in percentage terms. The financial crisis is exceptionally favourable for the sale of physical gold, which investors come to as a haven to protect their assets and their purchasing power.
Central banks took third place with 15% of the total demand. Central banks have been net buyers of gold for the past few years, with purchase figures that have broken records nearly 50 years ago.
ETFs and other forms of investment known as paper gold accounted for 9.21% of demand in 2019. It will continue to benefit from the strength of the metal this year too.
Finally, the technology sector demanded more than 326 tons of gold. On the one hand, economic slowdown tends to impact this sector this year.