The World Gold Council’s Gold Demand Trends Report for Q3/2023, just released, shows that central banks continued to maintain a record pace of gold purchases, bringing global gold demand in Q3 (excluding the OTC market) to 1,147 tonnes, 8% higher than the five-year average.
Data from the World Gold Council recorded this as the third quarter with the highest net central bank purchases, reaching 337 tonnes. Although it has not broken the record for the same period in 2022, demand since the beginning of the year has reached 800 tonnes, setting a new record. This strong central bank purchasing power is expected to continue from now until the end of the year, suggesting that total demand in 2023 will increase strongly again.
Mr. Shaokai Fan, Managing Director, Asia Pacific (excluding China) and Global Head of Central Banks at the World Gold Council, said: “Jewelry demand in Vietnam in the third quarter was at its lowest level since 2021. High inflation and slower-than-expected economic growth have affected consumer purchasing power. However, investors have used the August price correction as a safe-haven to strategically invest in gold bars and coins as a place to store wealth.”
Globally, gold investment demand in the quarter reached 157 tonnes, up 56% year-on-year, but still lower than the average over the past five years. In the European market, demand for gold bars and coins in the third quarter decreased, but still reached 296 tonnes, higher than the previous quarter and notably above the five-year average.
Meanwhile, gold ETFs continued to record net outflows in the third quarter, mainly due to investors’ perception that interest rates would remain high. However, investment demand in the OTC market remained strong, reaching 120 tonnes in the quarter, driven by demand from high-net-worth investors in Turkey and some gold hoarding in other markets.
Jewelry demand remained fairly stable despite high gold prices, however, global jewelry consumption recorded a slight decline, down 2% year-on-year to 516 tonnes due to cost-of-living pressures on consumers in many markets around the world.
Global gold supply increased by 6% year-on-year in the third quarter, with mine production hitting a record high for the year, year-to-date at 2,744 tonnes. The continued rise in gold prices has boosted recycling, with volumes rising to 289 tonnes, up 8% year-on-year.
Louise Street, Senior Market Analyst at the World Gold Council, said: “Demand for gold has been steady throughout the year, with healthy yields under pressure from high interest rates and a strong US dollar. Our report shows that demand for gold this quarter has been resilient compared to the five-year average. Looking ahead, with geopolitical tensions rising and expectations of continued strong central bank buying, demand could exceed expectations.”