The World Gold Council’s Gold Demand Trends report reveals that annual gold demand (excluding OTC) fell to 4,448t in 2023, down just 5% from a notably strong 2022. When factoring in demand from the OTC markets and other sources, total demand climbed to a new annual record at 4,899t. Investment from this more opaque source of demand supported 2023’s highest annual average gold price on record.
The central bank buying streak continued on from 2022 at a blistering rate. Demand reached 1,037t last year, making it the second highest on record, down just 45t on the previous year.
In contrast to robust OTC and central bank demand, ETF outflows continued in 2023, losing 244t in a third consecutive year of decline, with outflows in Europe dominating the picture.
Turning to bar and coin investment, demand was subdued and down 3% as strength in some markets worked to offset weakness elsewhere. European demand continued to plumet, down 59% year-on-year. This decline was offset by a strong post-COVID recovery in China, where annual demand was up 28% to 280t; combined with notable increases in India (185t), Turkey (160t), and the US (113t).
The global jewellery market proved to be remarkably resilient amidst record-high prices as demand inched up by 3t year-on-year. China played an important role, recording a 17% increase in demand for gold, as it recovered from COVID-19 lockdowns, offsetting a 9% decrease in India.
Mine production was relatively flat in 2023, up 1%. Recycling increased by 9%, which was lower than expected given the high gold price and drove total supply up 3%.
Louise Street, Senior Markets Analyst at the World Gold Council, commented:
“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 in 2024 we expect this to have a pronounced impact on the market. 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.”
Somasundaram PR, Regional CEO, India, World Gold Council said: "India's gold demand in 2023 declined by 3% to 747.5 tonnes strongly influenced by rising gold prices. Although consumer interest remained high, it lagged trade sentiment. October's price correction during Navratri stimulated a robust consumer response, boosting Diwali sales in November. However, demand declined in December as gold prices resumed an upward trend, resulting in a 9% drop in
Q4 jewellery demand compared to Q4 2022.”
Bar and coin investment in India rebounded, growing by 7% to 185 tonnes year-on-year. Q4 demand touched 67 tonnes, 64% above the five-year quarterly average. The correction in gold prices led to some robust investment responses in Q3 and Q4, supported by increased interest from physically backed gold ETF investors, setting total holdings in Indian-listed products to a record 42 tonnes by year-end.
Recycling was 20% higher due to low and supportive higher prices but at 117 tonnes, could be considered the normative expected level. Net gold imports surged by 20% to 780.7 tonnes in 2023, primarily due to substantial inventory building by the trade.
Looking forward to 2024, India's gold demand should benefit from ongoing positive economic conditions. The subdued demand range of 700-800 tonnes since 2019 attributable to continuous rise in prices, increase in duties, stock market outperformance, near-term elections spending impact and acceptance of elevated price levels, suggest the potential for a spurt in demand in the near future. However, any short-term impediments to higher demand could arise from another round of sharp price hikes and volatility triggered by global factors.”
India Demand Statistics for Q4 2023 (October – December)
• Demand for gold in India for Q4 2023 was at 266.2 tonnes, down by 4% as compared to overall Q4 demand for 2022 (276.3 tonnes)
• India’s Q4 2022 gold demand value was Rs 250,000 crores, up by 15% as compared to Q4 2022 (Rs 217,120 crores)
• Total Jewellery demand in India for Q4 2023 decreased by 9%% at 199.6 tonnes as compared to Q4 2022 (219.9 tonnes)
• The value of jewellery demand was Rs 187,390 crores, up by 8% from Q4 2022 (Rs. 172,780 crores)
• Total Investment demand for Q4 2023 at 66.7 tonnes increased by 18% in comparison to Q4 2022 (56.4 tonnes)
• In value terms, gold Investment demand in Q4 2023 was Rs. 62,610 crores, up by 41% from Q4 2022 (Rs. 44,340 crores)
• Total gold recycled in India in Q4 2023 was 25.6 tonnes, down by 16% compared to 30.5 tonnes in Q4 2022
• Total gold recycled in Indian in 2023 was 117.1 tonnes, up by 20% compared to 97.6 tonnes in 2022.
• Total gold imports in India in Q4 2023 was 217.7 tonnes, up by 43% compared to 151.8 tonnes in Q4 2022
• Total gold imported in India in 2023 was 780.7 tonnes, up by 20% compared to 650.7 tonnes in 2022.
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