[ad_1]
Investing.com: Since the end of yesterday’s US trading session, which witnessed a sharp increase in market appetite, it has increased by more than 530 points. And gold now registers a futures price of $ 1,730 per ounce, while it increases for spot transactions to $ 1,717.64 per ounce.
Today, Thursday, the World Gold Council released the quarterly report on gold demand trends, in which we see an increase in demand of 1,083.8 tonnes between January and March, an increase of 1% compared to the demand for gold in the first quarter of 2019.
The main and dominant theme in the gold market remains the unprecedented investment demand for gold investment vehicles, such as ETFs. The report shows the quarterly rate of increase in the flow of tons of gold in the traded funds, and witnessed more than 298 tons in the first three months, taking the total properties of the gold-traded funds to a record 3,185 tons . The World Gold Council says that the influx in the first quarter increased by 300% compared to last year’s entries.
“The Corona virus spread rapidly to invade the planet during the first quarter of the year, and this was the only factor that most influenced the demand for gold. With massive outbreaks and serious economic consequences, investors seek refuge,” analysts say. in the report.
The Board says that demand for exchange-traded funds reached its highest levels in 4 years, taking gold to 8-year levels.
And analysts say: “When estimating the demand for gold in dollars, we will see that it reaches 55 billion dollars, the highest levels since the second quarter of 2013.”
Investment in gold coins and alloys, according to the World Gold Council, fell to 214.6 tons, a 6% decrease in demand in 2019. However, the issue is related to the economic consequences of the coins of the emerging markets, so those currencies weakened to weaken gold demand, while gold demand increased in the Western Region segment to the highest level in 3 years with 76.9 tonnes, an increase of 36% over the year past.
Analysts say: “Demand for small bars is more common in East Asian markets, and those countries were among the first exposed to the Coruña virus and closing procedures. Gold also hit record levels against currencies. of those countries, which encouraged profit taking for some time in the first quarter. ” “
Gold demand declined in the jewelry industry in the first quarter
Although the demand for gold increased in the first quarter, this increase favored investment in gold, but the jewelry market did not read the same story, and most of the demand for physical gold is concentrated in it.
“Without exception, all jewelry markets in the world registered losses annually, with the consequences of the Corona virus, which boosted gold prices,” analysts of the report say. “Jewelry consumption fell during the first quarter as prices rose sharply in many countries, coinciding with the closing of economies to halt the outbreak of the Corona virus.”
Overall, the demand for gold in the jewelry industry fell to 325.8 tonnes, a decrease of 39% compared to the first quarter of 2019, and the demand for jewelry was at its lowest point.
China recorded a 65% decline, the most ferocious decline among countries in the world.
While India registered a 41% decrease, and the Council added that the situation may worsen.
The council added that expectations for the second quarter remain bleak, and that the economy will continue to close throughout May, which will affect demand for gold on Indian holidays.
Jewelry demand is declining for the first time since the fourth quarter of 2016.
Central bank demand for gold reached 145 tons in the first quarter, a decrease of 8%. The council noted that only 6 central banks bought more than 10 tons of gold between January and March.
“While central banks around the world focus their efforts on anti-virus measures, banks need diverse and strong reserves. Net gold purchases remain an important factor for these reserves,” analysts say.
Gold supply decreased
As demand increases, supply falls. The World Gold Council says the net gold supply was 1,066.2 tonnes, down 4% compared to the first quarter of 2019.
The Council notes that supplies decreased by 3%, with mines closed, as part of efforts to stop the spread of the Corunna virus.
Analysts say: “The annual decrease in production during the first quarter, understandable in the context of the closure of the global economy, to halt the impact of the Corona virus on industries.”
Gold rises to record levels, while Treasury yields fall. However, the US stock market remains high in contradiction to reality and economic figures.
Gold rally exposes weak stock market
As we mentioned earlier in the World Gold Council’s quarterly report, we say that the demand for gold is increasing.
So why would investors buy gold in that amount if they were confident of a strong economic recovery?
ONADA’s Edward Moya says the recovery in the stock market is taking on an extraordinary remedy for the economic crisis caused by the Corunna virus.
On the ground, however, U.S. GDP in the first quarter yesterday fell -4.8% to 2009 levels, and the U.S. job market erased the jobs it created for more than a decade. Also, until now, we have had no final decision to return the American economy to work.
The Dow Jones Relative Strength Index has reached 70%, and when the index is in the 70-75% range we infer a high overbought condition.
“The stock market is a laughing stock,” says Dave Portney.
Portnoy adds that, despite all the gloomy macroeconomic factors, the stock market continues to rise, with the only hope that the economy will recover strongly.
[ad_2]
