Overview of the global gold market
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Objectives:
The analysis of the Indian oil market is aimed at finding up-to-date information and analyzing the market volume, consumers and competitors in the market under study, the changes that occurred in 2017-2019, as well as the forecast and trends in the industry in the long term for the period up to 2024.
Content
Part 1. Overview of the global gold market
1.1. Main characteristics of the market
1.2. Dynamics of the volume of the gold market in 2016-2020 Potential market capacity
1.3. Assessment of factors affecting the market
1.4. Life cycle stage of the gold market
1.5. Competition from substitute products
Part 2. Competitive analysis in the gold market
2.1. Major players in the market
2.2. Market shares of the largest competitors
2.3. Profiles of major players
Part 3. Forecast for the development of the gold market until 2025
Part 4. Findings from the study
About the gold market
The gold market is the buying and selling of gold around the world. Gold has been used as a trading commodity for thousands of years, and even today, its intrinsic value makes it ideal for international wealth transfer and long-term investment. Experienced investors monitor the gold market in order to maximize the time for their acquisitions.
Despite a strong decline in global gold reserves in 2019, where the figures reached a minimum for the study period from 2016 to 2020 at 50 thousand tons of gold; in 2020, the level of global gold reserves began to recover and showed an increase of 6%, reaching 53 thousand tons, which is already much closer to the indicators of 2017-2018.
Diagram. World gold reserves in 2016-2020, thousand tons
Source: World Gold Council
The current state of the market in the world
Based on the statistics on world gold reserves, we can conclude that gold had one of the lowest drawdowns in relation to the overall economic situation. This factor helped investors limit their losses and better manage volatility.
By the beginning of August 2020, the price of LBMA PM gold reached an all-time high of $2 per ounce. Record figures were also achieved in other currency equivalents. During the rest of the year, the price of gold fell slightly, but remained at a consistently high and comfortable level above $067 an ounce, reaching $1800 by the end of the year, up 1887,6% from 2019.
Diagram. Dynamics of world gold prices in 2016-2020, USD
Source: World Gold Council
According to the World Gold Council report, the positive dynamics of gold prices in the second half of the year was more associated with physical investment demand, in the form of gold ETFs or bars and coins, rather than with the futures market.
An example is the positions on COMEX, which also for 2020 reached a historical maximum of 1 tons in the first quarter of the year, but at the end of 209, this figure fell by almost 2020%. The World Gold Council suggests that this may have been due to the March COMEX futures shifting relative to the spot gold price, making futures more expensive to hold compared to other options.
Regarding the distribution of gold reserves by country, the United States is the leader in physical terms, overtaking the nearest leaders by more than half; in 2020, the country's total reserves amounted to 8 tons. Germany is in second place with 133 tons, Italy is in third with 3 tons. France and India round out the top five.
Diagram. Gold reserves by leading countries in 2020, tons
Source: World Gold Council
Investments in the global market
Global equities for 2020 performed well in November and December. So, for example, the MSCI All World Index showed an increase of almost 20% in the second half of 2020. Caution in the gold investment market is introduced by the unstable global economic situation associated with an increase in the incidence of COVID19 and the spread of new strains of the virus. However, investor interest in the gold market does not subside even at the beginning of 2021, the market does not lose its achieved positions.
Going forward, the World Gold Council predicts that fairly low global interest rates are likely to keep share prices and valuations high. Thus, investors may experience strong market fluctuations and significant pullbacks if the global vaccination situation does not go according to a positive scenario and takes longer than expected, due to the impossibility of quickly adjusting medicine to new strains of the virus.
In addition, many investors are concerned about the potential risks posed by widening countries' budget deficits, which, combined with low interest rates and rising money supply, could lead to inflationary pressures. This concern is highlighted by the fact that central banks, including the US Federal Reserve and the European Central Bank, have declared greater tolerance for inflation temporarily exceeding their traditional target ranges.
Conclusions on the gold market
The dynamics of the gold market can be explained by four main categories of factors:
Economic growth - periods of growth positively influence the development of markets for jewelry, technology and long-term savings;
Risk and Uncertainty - Strong economic downturns can often boost investment demand for gold as a safe haven for their assets;
Opportunity cost - interest rates and the relative strength of the currency affect investors' attitudes towards gold;
Momentum - Capital flows, positioning and price trends can set fire to or dampen gold's performance.
In 2020, the increase in gold prices can be explained through the emerging situation of risk and uncertainty around the world, due to the pandemic, political and economic events
For a more detailed overview of the dynamics of the market volume, analysis of demand, investments in the gold market, we suggest ordering a full-fledged market research.
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