Demand for gold globally dropped 19 per cent during theJuly-September quarter to 892.3 tonne, largely due to weak consumer demand amidthe pandemic, said a World Gold Council report.
So far in 2020, the demand stood at 2,972.1 tonne, around 10per cent below the same period of 2019.
"Demand for gold dropped to 892.3t in Q3 - its lowestquarterly total since Q3 2009 -as consumers and investors continued to battlethe effects of the global pandemic," it said.
The report noted that jewellery demand improved from the Q2record low, the combination of continued social restrictions, economic slowdownand a strong gold price continued to impact demand from jewellery buyers.
Gold jewellery demand during the period under review stoodat 333 tonne, 29 per cent below an already relatively anaemic Q3 2019, it said.
In contrast, bar and coin demand strengthened, gaining 49per cent y-o-y to 222.1 tonne. Much of the growth was in official coins, due tocontinued strong safe-haven demand in Western markets and Turkey, where coinsare the more prevalent form of gold investment.
The third quarter of 2020 also saw continued inflows intogold-backed exchange traded funds (ETF), although at a slower pace than in thefirst half.
Investors globally added 272.5 tonne to their holdings ofthese products, taking year-to-date flows to a record 1,003.3 tonne.
Central banks generated small net sales of gold in Q3, thefirst quarter of net sales since Q4 2010. Sales were generated primarily byjust two central banks - Uzbekistan and Turkey - while a handful of bankscontinued steady albeit small purchases, as per the WGC report.
Demand for gold used in technology remained weak in Q3, wasdown 6 per cent y-o-y at 76.7 tonne. But the sector saw a decent quarterlyimprovement as some key markets emerged from lockdown.
The total supply of gold fell 3 per cent y-o-y in Q3 to1,223.6 tonne, despite 6 per cent growth in gold recycling, with mineproduction still feeling the effects of the H1 Covid-19 restrictions.
On the jewellery demand in India, the report said that thesegment staged a modest recovery from its Q2 record low but remained well below2019 levels. Demand was 48 per cent lower y-o-y at just 52.8 tonne, the thirdlowest quarter for Indian jewellery demand in our data series.
"Not only did Indian consumers have to cope withrecurring lockdowns and unprecedented gold prices, but also the inauspiciousperiods of 'Pitru-Paksha' and 'Adhik Maas' discouraged buying during September(both periods are considered by Hindus to be inauspicious for goldpurchases)," it said.
As the local gold price breached Rs 50,000 per 10 gram, amajor milestone for India, casual and impulsive purchases were curtailed infavour of needs-based buying. The prohibitive price level also encouraged ashift to lighter-weight plain gold pieces.
Despite the positive monsoon season, consumer confidenceremains heavily impacted by the economic impact of the measures imposed tocontain the pandemic.
Speaking to IANS, Somasundaram P.R., Managing Director,India for World Gold Council noted that there are hopes that the jewellerydemand would improve in the festive of the fourth quarter.
India's GDP contracted by a whopping 23.9 per cent in Q22020 and is expected to contract by 12.7 per cent in Q3.
The report, however noted that there has been an increasingfocus on the use of gold as collateral for loans.