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Record H1 inflows into gold-backed ETFs offset weakness in all other sectors of the market, with demand hit by the ongoing global coronavirus pandemic.

Central bank reserves are typically constructed according to three guiding principles: safety, liquidity and return. The Covid-19 pandemic has reinforced the significance of these principles and, by extension, the importance of smart and sustainable reserve management. 

The global COVID-19 pandemic fuelled safe-haven investment demand for gold, offsetting marked weakness in consumer-focused sectors of the market.

Gold demand fell 1% in 2019 as a huge rise in investment flows into ETFs and similar products was matched by the price-driven slump in consumer demand.

Risk appetite amid high uncertainty
As we look ahead, we expect that the interplay between market risk and economic growth will drive gold demand in 2020

Surge in ETF inflows supports Q3 gold demand growth. Gold demand grew modestly to 1,107.9t in Q3 thanks to the largest ETF inflows since Q1 2016

The global bullion banking industry is large and well-established with annual revenues estimated at more than US$1.5bn. The market includes both international banks and smaller local players.

In 2018, central banks added more gold to their international reserves than at any time since the end of Bretton Woods nearly 50 years ago. Nineteen central banks reported a meaningful increase in their gold reserves, giving rise to total purchases of 651 tonnes.

Gold demand was 1,123t in Q2, up 8% y-o-y. H1 demand jumped to a three-year high of 2,181.7t, largely due to record-breaking central bank purchases.