Gold Passes $2K Per Ounce as Jewelry Demand Plummets

London—The story of gold jewelry demand and price in the first half of the year is inextricably linked to the COVID-19 pandemic.

As nations across the world enacted lockdown restrictions, primarily during the second quarter, to slow the spread of the coronavirus, demand for both gold and gold jewelry plummeted, the World Gold Council said in its most recent Gold Demand Trends report.

Even as the pandemic severely hampered consumer demand, it also provided an opportunity for investment, with central banks and governments fueling record flows into gold-backed ETFs, lifting the gold price to record highs in several currencies.

As of Friday, the precious metal was trading at $2,034.80 per ounce, according to Kitco.com, a major increase since the start of the year.

In January, the gold price averaged $1,560.67, Kitco charts show.

The gold price continued to rise until mid-March, when it fell to a low of $1,474.25 as governments worldwide began enacting stay-at-home orders.

Then it began its rise again, increasing every month until it passed the $2,000-per-ounce price point in August, reaching its highest point in eight years.

And it doesn’t seem likely it will level out anytime soon, according to some experts.

A few sources have predicted the price of gold could increase to as much as $3,000 per ounce within the next 18 months or even by year’s end.

As the gold price continues its climb, jewelry demand has gone the other way.

According to the World Gold Council, gold jewelry demand was nearly cut in half during the first half of the year, falling 46 percent year-over-year to 572 tons, which it said is the lowest since it started keeping track.

It’s also around half of the 10-year average of 1,106 tons.

In Q2, demand reached a quarterly low of 251 tons, a 53 percent decline year-over-year, as consumers across the world felt the effects of lockdown and the resulting economic slowdown.

In the U.S., demand lost some of the momentum it had gained in recent years, falling 34 percent year-over-year in the second quarter to 19.1 tons, the lowest quarter in WGC’s series.

H1 demand was also down, declining 21 percent to an eight-year low of 41.9 tons.

WGC said store closures due to COVID-19 were the “clear reason” for the decline, made even more severe because the lockdown encompassed two holidays—Easter and Mother’s Day.

Demand “collapsed” in April