Dubai — A "tsunami" of secondary gold supply is ready to hit the market once global economies get back to normal, Jeffrey Rhodes, principal consultant of RAK Gold, told a webinar on Tuesday.
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The secondary gold supply hasn't hit the market yet even with gold at a seven-year high, John Reade of the World Gold Council, said in the Dubai Multi Commodities Center webinar on how precious metals have been affected by COVID-19.
"2020 will be a weak year for gold jewelry," he said, adding that he expects central banks to buy more gold this year.
The UAE has been buying more gold this year, according to latest International Monetary Fund data. The UAE increased its gold reserves by 5.9% in January 2020 after a 1.5% jump in December 2019 and 15% for the year of 2019.
The Dubai gold souk is slowly reopening, with about 30% staffing, Rhodes said.
"Guys say hardly anyone is there." he said. "It's noticeable gold has been coming into the market from Africa largely because India is closed," he said. "But there is no demand."
Gold jumped to a seven-year high as economies were battered by the coronavirus pandemic, fueling demand for a safe haven. Spot gold climbed to $1,764.73 an ounce on Monday, the highest since October 2010, although it has since declined slightly.
Gold could climb to $3,000 an ounce, Ross Norman, a longtime London-based gold market trader and commentator, said.
Gold supply was initially hit by the coronavirus pandemic as governments forced gold refineries in Switzerland and South Africa to temporarily close.
The panelists noted that the coronavirus in the Al Ras area in Dubai, home to the Dubai gold souk, significantly affected gold sales because of the high number of COVID-19 positive cases in the area. Al Ras and surrounding areas were among the hardest hit neighborhoods in Dubai, with a 24-hour lockdown imposed for two weeks.
Kevin Telmer, executive director of the Artisanal Gold Council, noted that artisanal mining is set to grow, with more people in Africa set to move to artisanal mining. Artisanal mining will be beneficial for countries with weak currencies, he added.
Louis Marechal of the Centre for Responsible Business Conduct of the OECD also concurred that artisanal gold mining will increase considerably.