Total fourth quarter (Q4) demand fell 19% y-o-y to 1,045.2 tons. Two main contributors to the drop were jewelry and physical bar demand, both of which reacted to the elevated gold price. In US dollar value terms, the decline in Q4 demand was much shallower – down just 3% to US $49.7 billion.
Inflows into global gold-backed ETFs and similar products pushed total holdings to a record year-end total of 2,885.5 tons. Holdings grew by 401.1 tons over the year, with 26.8 tons added in Q4. Inflows were heavily concentrated in Q3 as the US dollar gold price rallied to a six-year high.
Central banks were net buyers for a 10th consecutive year: global reserves grew by 650.3 tons, the second highest annual total for 50 years. Purchasing in Q4 of 109.6 tons was 34% lower y-o-y, although this was partly a reflection of the huge scale of gold buying in 2018.
China and India held sway over global consumer demand. Together, the two gold consuming giants accounted for 80% of the y-o-y decline in Q4 jewelry and retail investment demand. High gold prices and a softer economic environment were the main culprits.
Total annual gold supply edged up 2% to 4,776.1 tons. An 11% jump in recycling was the main reason for the increase, as consumers capitalized on the sharp rise in the gold price in the second half of the year. Annual mine production was marginally lower at 3,463.7 tons – the first annual decline for more than 10 years.
The gold price averaged US $1,481/oz in Q4. This was the highest average price since Q1 2013. Although the price remained below the Q3 high, it was well supported. And gold priced in various currencies – including euros, Indian rupees and Turkish lira – hit their highest levels in history.