According to the World Gold Council’s (WGC) quarterly demand trends report, global gold demand in the first quarter of 2023 decreased by 13% compared to the same period last year. While central banks and Chinese consumers made substantial purchases, reduced investor buying offset their contribution.
The report revealed that jewellers account for half of gold demand, while investors and states are responsible for most of the remainder. During economic instability, investors often view bullion as a safe asset and purchase more of it.
In 2022, gold demand reached an 11-year high due to the largest central bank purchases on record, while gold prices are currently near record highs at over $2,000 an ounce.
The WGC report indicated that central banks bought 228 tonnes of gold in Q1 2023, the most for any January-March period since 2000. Meanwhile, China’s jewellery demand in the same quarter was the highest since Q1 2015, at 198 tonnes.Â
In addition, US buyers worried about economic and banking instability bought 32 tonnes of gold bars and coins, the most for any quarter since 2010.
However, gold bar and coin purchases fell in Europe, Indian jewellery demand hit a three-year low, and exchange-traded funds storing bullion for investors sold gold, according to the WGC.
Investment demand for gold had already begun to increase in March as concerns over bank failures spread fear through markets and analysts anticipated the end of US interest rate hikes.Â
The WGC predicted that investment demand would continue to rise this year, and central bank purchases would remain robust, albeit lower than last year’s record levels.
Krishan Gopaul, a WGC analyst, noted that stockpiling by investors could lead to higher gold prices, potentially reducing demand in countries such as India where consumers are often discouraged by high prices.
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