The year 2020 has offered ups and downs for the gold industry. In the price department, a lot of positive momentum has been eroded recently. A decline in gold jewelry demand predicted by ICRA will not help matters much either.
Gold Jewelry Isn’t in Demand
Several use cases exist for gold today. It is a commonly used precious metal across many different industries. Additionally, all central banks around the world keep some of their reserves in physical bullion, be it bars or coins. Last but not least, there is the jewelry industry to take into account.
A new report by ICRA pains a rather bleak picture in that regard. They see a strong decline in gold jewelry. This decline has already started earlier this year. However, it is expected to reach 35% year-over-year by the end of this fiscal year. Things were precarious during the first half of 2020 already.
With countries facing secondary lockdowns due to COVID-19, selling gold jewelry has proven to be challenging. It is one of those things consumers aren’t keen on buying over the internet. Especially when a ring or necklace costs thousands of dollars, e-commerce is not the most viable option.
Moreover, the current restrictions imposed by governments prevent mass gatherings. When consumers can’t show off their gold jewelry to others, there is simply less demand. Even in 2020, gold is still a sign of status and wealth. That certainly has come to change where the demand for gold jewelry is concerned.
What Happens in 2021?
Today, there is a lot of excitement regarding multiple COVID-19 vaccines. None of these solutions have received the necessary approval to be distributed. Moreover, it usually takes 10 years to find a cure for such viruses. These vaccines are created in 10 months or less, raising a lot of questions. Even doctors are not too keen on being injected with these vaccines.
Assuming these solutions work – or at least, partially – there will still be a severe strain on social life. A world in which COVID-19 doesn’t exist seems impossible to achieve. Even with vaccines, the virus itself will not go away on its own. Considering how it keeps mutating, the demand for gold jewelry may not rise again in the foreseeable future.
What that means for the bullion industry, is difficult to predict. No one is used to dealing with a global pandemic and how it affects both supply chains and consumer demand. Anything can happen from this point forward, either for better or worse.