March 5, 2024

Global gold demand peaks in 2023 despite challenges

Geopolitical uncertainty may drive up gold interest in 2024

The World Gold Council’s latest Gold Demand Trends report reveals that global gold demand reached a new annual record in 2023, hitting 4,899 tons when factoring in over-the-counter (OTC) markets and other sources.

The report, released on January 31, 2024, indicates that this surge comes despite a 5% dip in annual gold demand (excluding OTC) to 4,448 tons, following a remarkably robust 2022.

The key driver of this surge was the significant investment from the more opaque sources, such as OTC markets, contributing to the highest annual average gold price on record for 2023.

Central banks’ role

Central banks continued their fervent gold-buying streak, with demand reaching 1,037 tons – the second highest on record, only 45 tons less than the previous year.

However, not all sectors experienced an upward trend. Exchange-traded fund (ETF) outflows in Europe continued for the third consecutive year, losing 244 tons.

Conversely, bar and coin investments showed a 3% decline, with European demand plummeting by 59% year-on-year.

This slump was counteracted by a robust post-COVID recovery in China, where annual demand rose by 28%, along with notable increases in India (185 tons), Turkey (160 tons), and the US (113 tons).

Surprisingly, the global jewellery market displayed resilience despite record-high gold prices, witnessing a modest increase of 3 tons year-on-year.

China leads

China played a pivotal role in this, recording a 17% surge in gold demand, bouncing back from the Covid-19 lockdowns. However, India experienced a 9% decrease.

Mine production remained flat in 2023, increasing by only 1%, while recycling saw a 9% uptick, lower than expected given the elevated gold price. This contributed to a 3% overall increase in total supply.

Louise Street, Senior Markets Analyst at the World Gold Council, offered insights into these trends, stating: “Unwavering demand from central banks has been supportive of gold demand again this year [2023] and helped offset weakness in other areas of the market, keeping 2023 demand well above the ten-year moving average.”

Street highlighted the potential impact of geopolitical uncertainty in 2024, anticipating it to be a significant driver of gold demand.

With ongoing conflicts, trade tensions, and over 60 elections worldwide, investors will likely turn to gold as a haven asset.

Street added: “Central banks often cite gold’s performance in times of crisis as a reason to buy, which suggests demand from this sector will stay high this year and may help to offset a slowdown in consumer demand due to elevated gold prices and slowing economic growth.”

Featured image: Central banks boosted gold demand in 2023. Image: Jingming Pan

    Arnold Pinto

    Arnold Pinto

    Arnold Pinto is an award-winning journalist with wide-ranging Middle East and Asia experience in the tech, space, aerospace, aviation, defence, luxury watchmaking, business, fashion, and automotive verticals. He is passionate about conserving endangered native wildlife globally and protecting the world’s oceans from plastic pollution, overfishing, and climate change. Arnold enjoys 4x4 off-roading, camping and exploring global destinations off the beaten track.
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