Demand for gold hit a fresh high of 4,899 tonnes in 2023, a report from the World Gold Council has revealed.
The report found that central bank buying, coupled with resilient jewellery consumption, helped to bolster prices throughout the year.
While annual gold demand, excluding over the counter (OTC), dipped 5% below a very strong 2022, significant OTC and stock flows totalling 398 tonnes pushed total gold demand in 2023 to the highest on record.
According to the Council’s report ‘Gold Demand Trends’, the central bank buying streak continued on from 2022 at a “blistering rate”, with demand reaching 1,037 tonnes last year. This made it the second highest on record, down just 45 tonnes on the previous year.
The global jewellery market also proved to be particularly resilient amidst record-high prices as demand inched up by 3 tonnes year-on-year. China played a key role, recording a 17% increase in demand for gold.
However, ETF outflows continued in 2023, losing 244 tonnes for the third consecutive year of decline, with Europe leading the outflows.
The Council said bar and coin investment was a mixed picture in 2023, with European demand continuing to plummet, while China enjoyed a strong post-Covid recovery and India, Turkey and the US also experienced a rise in demand.
Louise Streeter, senior markets analyst at the World Gold Council, said: “Unwavering demand from central banks has been supportive of gold demand again this year and helped offset weakness in other areas of the market, keeping 2023 demand well above the ten-year moving average.”
In addition to monetary policy, geopolitical uncertainty is often a key driver of gold demand and Streeter said the World Gold Council expects this to have a “pronounced impact” on the market in 2023.
“Ongoing conflicts, trade tensions and over 60 elections taking place around the world, are likely to encourage investors to turn to gold for its proven track-record as a safe haven asset.
“We know that central banks often cite gold’s performance in times of crisis as a reason to buy, which suggests demand from this sector will stay high this year and may help to offset a slowdown in consumer demand due to elevated gold prices and slowing economic growth,” Streeter added.
