In a recent report, the World Gold Council (WGC) revealed that central banks around the world have been on a significant gold buying spree, with year-to-date (YTD) gold demand reaching a record high in Q3. The council further highlights that this strong buying streak is expected to continue throughout the remainder of the year, indicating another robust annual total for 2023.
Investment demand in the third quarter stood at 157t, representing a significant 56% increase compared to the previous year. Despite this surge, investment demand fell short of the five-year average. In Europe, falling demand for bars and coins weighed down Q3 figures. However, with 296t of demand, the investment in this category rebounded from the previous quarter and exceeded the five-year average.
While gold exchange-traded funds (ETFs) experienced continued outflows in Q3, largely influenced by investor sentiment surrounding anticipated high interest rates, over-the-counter (OTC) investment remained strong. OTC investment reached 120t in the third quarter, driven by high net worth demand in Turkey and stock building activities in other markets.
Despite the elevated gold prices, jewelry demand remained resilient, albeit with a slight 2% decline compared to the previous year. The slight softening of jewelry consumption can be attributed to the cost of living pressures faced by consumers in many markets globally.
On the supply side, total gold supply in Q3 rose by 6% compared to the previous year, with mine production reaching a year-to-date record of 2,744t. The consistently high gold price played a significant role in increasing recycling to 289t, representing an 8% year-on-year increase.
Louise Street, senior markets analyst at WGC, commented on the findings, stating, “Gold demand has proven to be resilient throughout this year, performing well despite challenges such as high interest rates and a strong US dollar. Our report demonstrates that gold demand is healthy this quarter when compared with its five-year average. Looking ahead, with geopolitical tensions rising and the expectation of continued robust central bank buying, gold demand may exceed expectations.”