Global gold demand declined to 4,355.7 tonnes in 2019, down one per cent on 2018, according to the World Gold Council's latest Gold Demand Trends report released on Thursday.
The year 2019 was broadly one of two distinct halves: resilience and growth across most sectors in the first six months contrasted with widespread weakness in the second.
India and China held sway over global consumer demand. Together, the two gold consuming giants accounted for 80 per cent of the year-on-year decline in Q4 2019 jewellery and retail investment demand.
High and more volatile gold prices and a softer economic environment were the main culprits.
Central bank demand slowed in the second half -- down 38 per cent -- in contrast with H1's 65 per cent increase. However, this was partly due to the sheer scale of buying that had been seen in the preceding few quarters.
Annual buying nevertheless still reached a remarkable 650.3 tonnes -- the second highest level for 50 years and only six tonnes less than in 2018.
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Gold-backed exchange-traded funds (ETFs) inflows bucked the general trend, with investment in these products holding up strongly throughout the first nine months of the year, reaching a crescendo of 255.5 tonnes in Q3. Momentum then subsided in Q4 with inflows slowing to 26.4 tonnes (minus 77 per cent year-on-year).
Accommodative monetary policies and global geopolitical uncertainties, along with momentum buying, were the main factors driving inflows into the sector in 2019.
"Demand for gold-backed ETFs surged in 2019 as investors sought to diversify their portfolios and hedge against uncertainty in other markets," said Alistair Hewitt, Head of Market Intelligence at the World Gold Council.
"These inflows along with a sharp increase in futures positioning saw the US dollar gold price reach a six-year high. But retail investment and jewellery demand sank partly due to the rapid price rise in the second half of the year," he said.
"Looking ahead, we expect gold's safe-haven qualities to remain at the forefront of investors' minds as they navigate global tensions, low yields and stretched equity valuations," added Hewitt.
The annual supply of gold increased two per cent to 4,776 tonnes. This growth came purely from recycling and hedging while mine production slipped one per cent to 3,436.7 tonnes.
Gold priced in various currencies -- including Indian rupee, euro and the Turkish lira -- hit their highest levels in history.
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