The price of gold hit a record The Corona virus pandemic has high not only in the USD but reached almost every country in the also in other currencies, such world. An unprecedented shock to the as the euro, Chinese yuan, global labour market led to severe disrupSwiss franc, and many other. In tions in the goods and services markets in November 2020, the price exa number of sectors, and a contraction of pressed in Rubel terms went up the global output by 3.5%. The pandemic to 462 RUB, a 60% increase over caused an economic shock three times the year before. worse than the global financial crisis of While the price recorded 2008 and an extraordinary response of its record high, the total defiscal and monetary policies. mand for gold dropped to 3760 During times of uncertainty and critonnes, an 11-year low. The reses investors regularly turn to gold as an sponse of consumers, public asset that provides them with security and private investors to the criand a hedge against financial risks, insis was quite different. Chart 2 flation and currency fluctuations. It has shows the structure of annual also been evident during the pandemic, gold demand by sector. when the conditions of high uncertainty, ultra-low interest rates and large fiscal The global jewellery destimuli prompted investors worldwide mand dropped by 34% as a reto turn to gold as a safe haven and a long sult of high prices and a decline term store of value. in disposable incomes, especialThe year of the pandemic was a “year ly in China and India which of records” for gold. The price of gold constitute half of the global jewhit its all-time highs, the global gold4 500 inellery market. Similarly, Russian vestment demand reached its historical 4 000 consumers reduced their jewelmaximum, while the demand for jewel3 500 lery purchases by 25%. lery and the scale of central bank gold 000 Although 2020 marked purchases slowed down to levels 3that 2 500 the 11th year of central bank have not been recorded for a decade. buying, the official sector deAt the beginning of August 2020, 2 000 mand sharply declined, which, the price of gold reached 2,067 USD 1 500 chiefly, was caused by the disper ounce, its historical high, and1 has 000 continuation of purchases by remained at this elevated level since then 500 the Bank of Russia. Over the (see chart 1). Despite the development last decade the Bank of Russia of new vaccines, the uncertainty has re-0 2019 2020 was the single largest buyer of mained high and the economic recovery Bars and coins Centralon banks gold, adding to itsETFs reserves, from the pandemic is likely to be unevenJewellery average every year, more than and longer than initially expected.
Chart 2. The structure of annual gold demand Global annual demand in tonnes by sector 250
4 500 4 000
200
3 500 3 000
150
2 500 2 000
100
1 500 1 000
50
500 0 2019 Jewellery
Bars and coins
0
2020 ETFs
Central banks
Russian annual demand in tonnes by sector 250 200 150 100 50 0 2019 Jewellery
Bars and coins
2020 ETFs
Central banks
Chart 1. The price of gold
EURASIAN FINANCIAL & ECONOMIC HERALD | #1 (12) 2021
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Jewellery
