IGI Logo

Gold's allure grows as central bank purchases and investor interest drive optimism in the market. While Q3 witnessed a slight dip, the World Gold Council foresees a potential surge in demand amid rising geopolitical tensions. As spot prices breach $2,000, gold remains a safe haven. Robust central bank buying and investor appetite set the stage for a promising year in 2023.

Highlights of Central Bank Gold Demand Trends

Q3 2023: Global gold demand declined by 6% in the third quarter. Central bank purchases saw a decrease, contributing to this decline. The quarter’s demand of 1,147.5 metric tons stood 8% ahead of its five-year average.

Official Sector Purchases: Although the official sector purchases in the full year are anticipated to approach 2022 levels, they were lower during this quarter compared to last year's record levels. Central bank demand for the full year was down from the extraordinary levels witnessed in 2022.

Gold Demand Expectations: Despite the current decline, the World Gold Council (WGC) expects global gold demand to potentially surprise positively due to increasing geopolitical tensions. There's an expectation for robust central bank buying to continue.

Investor Behavior: Demand from investors, who perceive gold as a safe asset during times of instability, increased by 56% in Q3. However, it remained weak compared to the five-year average. Outflows from exchange-traded funds (ETFs) storing bullion continued due to investor sentiment regarding high interest rates.

Central Bank Purchases: While the quarter saw a decrease in central bank demand, the first nine months of 2023 showed that official sector gold purchases reached 800 tons, exceeding any January-September period in WGC data going back to 2000. The report anticipates continued strong buying by central banks throughout the remainder of the year, indicating a robust annual total for 2023.

Gold Bars and Coins: Buying of gold bars and coins dropped by 14% in July-September, with decreased demand observed in Europe.

Total Global Gold Demand: When including over-the-counter (OTC) trading, which is conducted directly between two parties, total global gold demand rose by 6% to 1,267.1 metric tons in the third quarter.

Conclusion

In conclusion, the recent fluctuations in global gold demand underscore the precious metal's enduring appeal in uncertain times. Despite a temporary decline in the third quarter, the World Gold Council's outlook remains bullish, fueled by the persistent allure of gold for both central banks and investors seeking stability in a volatile world. As spot prices soar above $2,000, gold continues to shine as a reliable safe haven asset. The unwavering trend of robust central bank purchases and heightened investor interest portends a promising and resilient year ahead for the gold market, proving that its intrinsic value remains unwavering in the face of economic and geopolitical uncertainties.

Above views are of the author and not of the website kindly read disclaimer