Western investors piling into gold in the pandemic are more than making up for a collapse in demand for physical metal from traditional retail buyers in China and India, helping push prices to an eight-year high.
Inflows into exchange-traded funds this year –- mostly in North America and Europe –- are already inches away from the annual record set in 2009, according to data compiled by Bloomberg.
Meanwhile, demand in China and India, the world’s two biggest buyers of gold bars, coins and jewelry, plunged after the coronavirus stalled imports and emptied malls. Sales have been slow to return as rising prices deter buyers.
The shift underscores the global push-and-pull for gold between western investors looking for a safe haven and traditional demand centers for physical gold in Asia.
It also raises crucial questions for the market this year, as gold prices risk losing support if ETF inflows slow down, or could gain even more momentum if Chinese and Indian demand bounces back.