The demand for gold jewelry would grow 5.3% in 2021, to 1,858 tonnes, according to projections published by the Australian government.
With this, the revision reflects a higher-than-expected demand for Chinese gold jewelry in the first quarter of 2021.
On the one hand, in the United States, the consumption of gold jewelry grew 6.4% in the March quarter of 2021, and is expected to remain strong during the rest of 2021, driven by an effective implementation of the vaccine against Covid- 19, better consumer confidence and high household savings.
World gold consumption by sector
Meanwhile, in Europe, jewelry consumption is forecast to be weak, due to a slow rollout of the pandemic vaccine and a less vigorous economic recovery.
On May 21, 2021, the Russian government introduced legislation allowing the country’s national wealth fund to buy and hold gold with the Russian central bank (the Bank of Russia).
Therefore, this latest development is projected to boost gold consumption in Russia from 2021.
The most significant risk to global gold consumption in 2021 is the increase in Covid-19 cases in India.
India saw a 39% increase in demand for jewelry in the first quarter of 2021, but the latest wave of the pandemic is likely to curb demand for Indian jewelry for the remainder of 2021.
Overall, global demand for gold fell 23% year-on-year, to 816 tonnes in the first quarter of 2021.
The decline was due to a strong outflow of gold-backed exchange-traded funds (ETFs), which lost almost 178 tonnes (equivalent to US $ 9.5 billion).
An improvement in the global economy and the deployment of Covid-19 vaccines led to an exodus of institutional investor funds from safe-haven assets (such as gold ETFs) to riskier assets.
Gold purchases from the sector (that is, from central banks and other government financial institutions) fell 23% to 95 tonnes.
Likewise, support for the economic recovery from the pandemic appears to have been the main catalyst for the decline in appetite for gold by some central banks.
According to the World Gold Council, Turkey was the largest seller of gold in the March 2021 quarter, selling around 32 tons of gold.
Hungary was the largest buyer of gold in the March 2021 quarter, buying 63 tons of gold.