Global Gold Demand Slips 5% In 2023, China Leads With 17% Demand For Jewellery After Pandemic: WGC

The global body further revealed that global gold ETFs witnessed a third consecutive annual outflow, losing 244.4 tonne in 2023, compared to 109.5 tonne a year earlier

China dominated the global gold jewellery demand with a 17 per cent rise in gold demand as it recovered from the pandemic lockdowns, making up for the 9 per cent fall in India. 

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Global gold demand reduced by 5 per cent in 2023, against the preceding year, owing to continuing Exchange-Traded Fund (ETF) outflows, the World Gold Council revealed in its report. The report titled, ‘WGC’s Gold Demand Trends 2023’, found that global gold demand stood at 4,448.4 tonne in 2023, against 4,699 tonne in 2022. 

The global body further revealed that global gold ETFs witnessed a third consecutive annual outflow, losing 244.4 tonne in 2023, compared to 109.5 tonne a year earlier. The losses were dominated by Europe, which saw holdings decrease by 180 tonne, reported PTI. This also marked the worst annual performance since 2013. 

The gold body added that the pace of outflows slowed markedly into year-end, however, October’s heavy outflows dominated the fourth quarter of the 2023 calendar year. It noted that outflows from European funds continued in the first few weeks of the ongoing year, and North American-listed funds started slipping again, after seeing a two-month break in November and December. 

“Strong equity performance and continually shifting expectations surrounding the timing of rate cuts by major central banks across the world could be the likely drivers for the outflows,” the report stated. 

The data found that central bank buying also remained lower by 45 tonne in 2023 at 1,037 tonne in 2023, against 1,082 tonne recorded a year earlier. Central bank buying in 2023 remained the second-highest year on record, the report noted. 

“In 2023, the People's Bank of China with 225 tonnes and the National Bank of Poland with 130 tonnes added the most to their reserves, while the Central Bank of Uzbekistan and the National Bank of Kazakhstan were the biggest sellers,” the WGC report said.

It noted that Central banks have remained consistent net buyers on an annual basis since 2010, collecting over 7,800 tonne in the time, and of this amount, more than a quarter was purchased in the last two years. The Reserve Bank of India bought 16.2 tonne of gold in 2023 and 32 tonne in 2022, the data revealed. 

Regarding bar and coin investment, demand remained weak and slipped 3 per cent. European demand continued to decline 59 per cent, on a year-on-year (YoY) basis. This decrease was offset by a robust post-COVID recovery in China which saw the annual demand increase 28 per cent to 280 tonne, followed by gains in India (185 tonne), Turkey (160 tonne), and the US (113 tonne). 

The report found that the global jewellery market turned out to be very resilient amidst record-high prices as demand climbed up 3 tonne on a YoY basis, with China dominating with a 17 per cent rise in gold demand as it recovered from the pandemic lockdowns, making up for the 9 per cent fall in India. 

Louise Street, Senior Markets Analyst, WGC, 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 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,” she added.