As you know, during the first three months of this year, the yield on 10-year US Treasury bonds increased, the US dollar strengthened, and stock indices rose steadily. Against this background, the precious metal rate fell by more than 12%, and the demand for "paper" gold has significantly decreased.
The outflow of shares from ETFs was 177.9 tons, and the number of net long positions in the US futures market fell to the June 2019 low. A positive consequence of the decline in quotations was the improvement in the situation with consumer demand for jewelry in the main consumer countries - China and India. 477.4 tons of these products were purchased, up 52% ​​year on year.
In addition, aggregate retail demand for bullion and coins jumped to 339.5 tonnes, a 17-quarter high and above the 5-year average. This circumstance allowed the rate to stay above $ 1,700 per ounce for most of the quarter. Demand for the physical precious metal helped offset declining investment in paper gold.
Importantly, central banks increased their gold holdings by 95.5 tonnes, up 20% qoq. The leader in this context was Hungary, whose Central Bank purchased more than 60 tons of precious metal at a time.
The demand for gold, as the main defensive asset, will rise significantly in the event of higher inflation, new fiscal and monetary stimuli and escalation of geopolitical conflicts. In such conditions, its rate will begin to grow, reaching $ 2,000 per ounce.