Market update

The Indian government’s sustained campaign for improving overall tax compliance through a carrot-and-stick policy was reflected again in the 2021-22 Union Budget, with a few material announcements that impact gold. 

Primarily driven by the COVID-19 pandemic and its far-reaching impacts, China’s gold demand in 2020 declined by 27% compared to 2019, the lowest recorded demand in a decade.

2020 has been a memorable year for China’s economy and its gold market.

Demand for gold loans, both through banks and non-banking financial companies (NBFCs) has grown in response to the economic impact of the COVID-19 pandemic. 

India has embraced online retailing across different categories. Digital and social activity plays an increasingly important part in the purchase journey for gold. 

The gold supply chain is truly global. Gold is mined on every continent except Antarctica, refined into bars and coins in numerous countries, and distributed far and wide. This geographical dispersion not only brings stability to the gold market, it is also necessary to satisfy demand.

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. 

Since the start of 2016, assets in European gold-backed exchange traded products (ETPs) have grown rapidly, hitting a record high of 1,121.4t (US$48bn) in Q1 2019.

Following the launch of the AAOIFI Shari’ah Standard on Gold in 2016, we have engaged with Islamic banks and financial institutions to develop the market for Shari’ah-compliant gold-backed products. As part of this we undertook research to understand how investors view Islamic finance, their attitudes towards gold, and preferences for gold-backed products.