The Global Gold Council’s 2023 report unveils gold demand dynamics, with senior analyst Louise Street predicting ongoing conflict’s impact.
The report suggests that trade tensions and global elections are expected to drive investor interest in gold.
This year, gold demand, excluding the over-the-counter (OTC) market, fell slightly to 4,448 tons, down 5% from last year.
Yet, when including OTC and other sources, demand hit a record high of 4,899 tons, pushing the average annual gold price to its peak for 2023.
Central bank purchases maintained a swift pace, reaching 1,037 tons, the second-highest ever, only 45 tons below last year’s record.
Despite strong demand from OTC and central banks, ETFs saw a third year of net outflows, totaling 244 tons, mainly in Europe.
Bar and coin investments dropped by 3%, balancing out with varying market strengths.
European demand notably decreased by 59%, while China saw a 28% increase to 280 tons. India, Turkey, and the United States also reported significant rises.
The jewelry sector remained robust despite high prices, with a slight annual increase.
China, recovering from COVID-19 lockdowns, saw a 17% rise in demand, contrasting with a 9% fall in India.
Central banks’ steady demand
Mining output was stable with a 1% growth, and recycling went up by 9%, leading to a 3% increase in overall supply, which was lower than anticipated considering the high gold prices.
Street highlighted central banks’ steady demand as a crucial support for the gold market, compensating for other market areas’ weakness.
She pointed out that geopolitical uncertainties often boost gold demand.
With the expected influence of conflicts, trade tensions, and elections in 2024, investors might turn to gold as a safe asset.
Street also noted that central banks frequently mention gold’s crisis performance as a purchase rationale, implying that this sector’s demand is likely to stay strong.
Such demand might offset a slowdown in consumer interest caused by rising gold prices and economic slowdown.
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