Gold supply chain shows resilience amid COVID-19 disruption: World Gold Council

The COVID-19 pandemic has disrupted the global gold supply chain, but it has shown resilience in the face of a challenge unlike any other event in modern history, according to the World Gold Council.

In a market update published today, the global authority on gold highlighted the sector’s resilience in the face of lockdown restrictions affecting each stage of the gold supply chain.

“Both gold mining and recycling activities were curtailed due to lockdown restrictions in Q1. But the declines were modest in comparison to the scale of the disruption to other industries globally,” the Council said.

Total gold production fell 3% year-on-year (y-o-y) in Q1 following the curtailment of operations in key producing countries including China, South Africa and Peru. While this represented the largest y-o-y fall since Q1 2017, the Council described the decline as modest given the scale of the pandemic.

“In addition, we also saw downstream capacity reduced with a small number of refiners halting operations, as well as challenges in transporting physical gold due to the reduction in commercial flights.”

Valcambi, Argor-Heraeus and PAMP – three of the world’s largest refiners – suspended operations in March, which led to a slowdown in the process of producing gold bars and coins.

However, the report also underlined surging gold investment during Q1 as the COVID-19 outbreak took investor uncertainty to new highs against an existing global backdrop of low and negative interest rates.