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LAWRIE WILLIAMS: Global gold demand picking up nicely

After a Covid-19 pandemic-affected year when gold demand was adversely impacted by the global economic downturn, there is at least some positive news on gold demand beginning to filter in. The latest gold withdrawal figures for January this year from the Shanghai Gold Exchange (SGE), for example, show a very substantial year-on-year increase over those for the same month a year earlier – up just under 44% at 159.49 tonnes.  This is still well below the 2019 January gold withdrawal level though, but the positive trend that now seems to be emerging from the world’s largest gold consuming nation has to be an encouraging sign and suggests that gold consumption there is definitely on the up after a very disappointing 2020.  In that year Chinese gold demand as indicated by the SGE withdrawals figure, fell to a seven year low of only a little over 1,200 tonnes – less than half that recorded in the 2015 peak year for the nation’s gold demand..

Table: SGE Monthly Gold Withdrawals 2019-2021 (Tonnes)





% change 2020-2021

% change 2019-2021









































Full year**






 Source:  Shanghai Gold Exchange.

*Months incorporating Golden Week holidays when SGE closed

** Cumulative totals as reported by SGE

Obviously it is still too early to tell how much Chinese demand might increase over the full year, but this is now the sixth month in a row that withdrawals have been higher than the same month a year earlier and the January figure was the highest percentage year-on-year monthly increase recorded over this period.  These are both factors which should be considered as definitely positive news.

But China is not the only gold consuming nation where gold demand appears to be rising.  Recently the World Gold Council (WGC) announced that it expected that India – the world’s second largest gold consumer after China - was likely to see a rebound in gold consumption following its fall in 2020 to its lowest officially recorded level in 26 years with the resurrection of pent-up demand due to higher economic growth despite the ravages of the coronavirus pandemic. 

Indian gold demand growth will also likely be boosted by a good post-monsoon harvest given the agricultural sector has traditionally seen strong gold purchases in good years. 

India’s officially recorded gold and silver demand will also likely be boosted by the recent government decision to reduce import taxes by 5% on the two metals to benefit the nation’s huge jewellery fabrication industry and to cut precious metals smuggling.

In the West, the past year has also seen enormous inflows into gold and silver ETFs, and while this slowed down substantially towards the end of 2020, it has since turned positive again – particularly in the case of silver. 

Central bank gold buying also slowed down in 2020 with the two biggest buying nations – Russia and China – both withdrawing from official purchasing activity.  However there are already indications that central bank purchases in the current year may be on the rise again, although any such increase will likely be small given there is as yet no indication of either Russia or China returning to building their gold reserves.

08 Feb 2021 | Categories: Gold

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