Gold market sees solid start to 2022
Q1 gold demand was 34% above Q1 2021, driven by strong ETF inflows. In a quarter that saw the US dollar gold price rise by 8%, gold demand (excluding OTC) increased 34% y-o-y to 1,234t – the highest since Q4 2018 and 19% above the five-year average of 1,039t.
India has a long history of mining gold, but at a low level: 2020 gold mine production was just 1.6 tonnes. Legacy processes are in part to blame: investment in the sector has been discouraged by unwieldy processes.
Geopolitical crisis takes centre stage in February
Strong Q4 lifts full year demand 10%
Annual demand recovered across virtually all sectors – the notable exception being ETFs, which saw net annual outflows
Gold may face similar dynamics in 2022 than those from last year as competing forces support and curtail its performance.
With very little mining and modest levels of recycling, India is heavily reliant on bullion imports to meet its domestic demand. Indian official imports have continued to grow despite high import duty with official imports averaging 760t over the last decade.
Gold rose 2% in November based on the LBMA reference price, rallying early in the month before giving up most of those gains in the following weeks.
Gold-backed ETFs (gold ETFs) experienced net inflows of 13.6 tonnes (t) (US$838mn, 0.4% AUM) in November, the first month of positive flows since July. Inflows into North America and Europe well exceeded outflows from Asia, which saw negative flows for the first time since May. Global gold ETF holdings rebounded from year-to-date lows, increasing to 3,578t (US$208bn) as investment demand for larger gold ETFs returned amid decades-high inflation and heightened market volatility.