World Gold Council Report 2023: Q3 Gold Demand Trend

In Q3, gold demand was 8% above its five-year average at 1,147t but showed a 6% y/y decline. Central bank buying remained strong at 337t, marking the third strongest quarter in the data series, though falling short of Q3’22’s exceptional 459t. Meanwhile, investment demand showed mixed results; it was 56% higher y/y but weak relative to its five-year average, and Global gold ETFs saw a net outflow of 139t.

Here are the Q3 Gold Demand Trends as per the World Gold Council Report 2023:

Central Banks

Net central bank buying of gold in Q3 2023 was 337 tonnes, the third strongest quarter in the World Gold Council’s data series. This was lower than the exceptional 459 tonnes bought in Q3 2022, but demand from central banks year-to-date (YTD) is 14% ahead of the same period last year at a record 800 tonnes.

China leads record central bank gold buying in first nine months of the year. Many countries are turning to gold as a hedge against inflation and to reduce their reliance on the US dollar. Central banks have collectively bought 800 tonnes of gold during this period, marking a 14% increase compared to the previous year.

China has particularly stood out as the biggest gold buyer this year, maintaining an 11-month streak of gold purchases. The People’s Bank of China alone acquired 181 tonnes of gold, increasing its gold holdings to 4% of its reserves. Poland, with 57 tonnes, and Turkey, with 39 tonnes, came next as the largest gold buyers in the third quarter.

Investment Demand

Total investment demand for gold in Q3 2023 was 157 tonnes, 56% higher y/y but weak relative to its five-year average of 315 tonnes. Global gold ETFs lost 139 tonnes in Q3, a far smaller outflow than the 244 tonnes lost in Q3 2022.

Bar and coin investment declined 14% y/y to 296 tonnes, although remained firmly above the five-year quarterly average of 267 tonnes. The y/y decline is largely the product of sharp falls in Europe.

OTC investment totalled 120 tonnes in Q3. This opaque source of demand was again evident as the gold price found firm support for much of Q3, despite ETF outflows and falling COMEX futures net longs.

Jewellery Demand

Jewelry consumption softened slightly in Q3 2023, down 2% y/y at 516 tonnes amid continued gold price strength. Jewelry fabrication was marginally more resilient, down 1% to 578 tonnes due to inventory build-up.

India was the largest consumer of gold jewelry in Q3 2023, accounting for 171 tonnes. China was the second largest consumer, accounting for 155 tonnes.

Gold Supply

Mine production reached a record 971 tonnes in Q3 2023, helping to lift the total gold supply to 1,267 tonnes (+6% y/y). Recycling was also higher y/y, up 8% to 289 tonnes.

Conclusion

Overall, the outlook for gold is positive. The metal is seen as a safe haven asset in times of uncertainty and is also being increasingly viewed as a hedge against inflation.