Gold fans like to do a somewhat idiosyncratic calculation.

They say gold always retains its value while currencies come and go, appreciate and devalue.

They read from ancient sources that even in ancient Rome a rich Roman got a toga with a belt and leather sandals for an ounce of gold.

Today an ounce is worth just under $ 1,790 - with a little goodwill, you might be able to say that a bespoke suit plus shoes could be roughly in this price range.

But of course that is very constructed.

Christian Siedenbiedel

Editor in business.

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Even so, many investors have a reputation for providing some protection against inflation.

If the world's currencies lose value due to inflation, but the precious metal continues to enjoy high esteem, gold investors should actually benefit, all other things being equal.

But now the industry organization World Gold Council reports that gold demand is falling noticeably all over the world at the moment.

While the monthly inflation rates in Germany are heading towards 5 percent, the euro zone has at least reached 3.4 percent and the United States has even reached 5.4 percent, gold is not in great demand.

What's behind it?

The Gold Council puts the decline in total gold demand in the world in the third quarter compared to the same period last year at 7 percent.

Compared to the previous quarter, i.e. the months from April to June, the decline was even an impressive 13 percent - to 831 tons.

Jewelry demand is rising again

In an interview with the FAZ, Louise Street, an analyst at the Council, mentions one reason for the reluctance of institutional investors to invest in gold: the expectation of rising interest rates in America.

When interest rates rise, it makes investing in interest-free gold relatively less attractive.

At the same time, higher interest rates in America can strengthen the dollar - this makes gold more expensive outside of the dollar area and therefore even less attractive.

However, this calculation applies above all to investors in gold-backed securities, so-called paper gold, such as exchange-traded index funds (ETF) on gold. Private investors from Germany, for example, who purchase a comparatively large amount of physical gold, i.e. bars and coins, often calculate differently - over the long term. According to the council, they are currently loyal to gold. Large parts of the other demand for gold, for example for making jewelry or for use in electronics, even experienced a comeback with the economic recovery after the pandemic.

The outflow from gold ETFs around the world was 27 tons of gold in the third quarter, according to the council. In comparison, there were inflows of 274 tons in the same period of the previous year. This change in trend in particular is currently shaping the figures. The demand for gold bars and coins rose year-on-year by 18 percent to 262 tons. The analysts blame the gold price, which was lower than in late summer 2020 - in August of last year, the gold price had reached its all-time high at $ 2071 per troy ounce (31.1 grams).

The demand for gold for jewelry production rose 33 percent year-on-year to 443 tons.

The industry ordered 84 tons of technology gold, an increase of 9 percent.

This is where the global economic recovery after the lockdown is making itself felt.

In the coming quarters, however, the effects of supply bottlenecks in the electronics sector could be felt in industrial demand, says analyst Street.

According to the council, the demand for dental gold fell by 8 percent to 2.9 tons.

Central banks are now on the buy side

The central banks bought less gold in the third quarter than in the second;

the decrease was 64 percent to 69 tons.

Compared to the third quarter of 2020, however, they hit much more strongly, at that time the central banks were gold net sellers and had parted with 10.6 tons.

"The relatively modest outflows from gold ETFs have had a disproportionate impact on this year's numbers and outweigh the positive developments in almost all other areas," says analyst Street. The fund outflows themselves are part of a bigger picture: “A year ago, investors flocked to gold in order to hedge against the pandemic - the exchange-traded gold funds, which added more than 1,000 tons in the first three quarters of 2020, benefited in particular "Says Street. In comparison, the drains are now rather modest. For the year as a whole, the Council is assuming that the strong demand from consumers and central banks will offset the losses in the exchange-traded funds: "The demand for jewelry will continue to be above the previous year's level,but overall investment demand will be weaker in 2021 - despite healthy bar and coin demand. "