Global gold demand reached record levels in the third quarter of 2023, totaling 1,313 tons, according to the World Gold Council (WGC). This marked the highest quarterly demand ever recorded. Compared to the same period in 2022, demand saw a 3% increase in volume and a significant 44% rise in value. Contributing factors included geopolitical instability, a weakening US dollar, and a fear of missing out (FOMO) as gold prices soared.
Investment Trends and Central Bank Purchases
Investment demand for gold surged by 47% year-on-year, reaching 537 tons. This category accounted for 55% of total demand. Central banks purchased 220 tons of gold, a 10% increase despite rising gold prices. Since the start of the year, spot gold prices have jumped by 50%, hitting a record of $4,381 per ounce on October 20, 2023.
Changes in Gold Products
- Demand for gold bars and coins rose by 17%.
- In flows into exchange-traded funds (ETFs) surged by 134%.
- Conversely, demand for gold jewelry declined by 23%, totaling 419.2 tons.
According to Louise Street, a senior analyst at the WGC, the gold market remains unsaturated, with expectations of continued high demand. Street noted that the outlook for gold is optimistic due to ongoing US dollar weakness, expectations for lower interest rates, and potential risks of stagflation boosting investment demand.
Central Bank Activities and Market Reactions
Fan Shaokai, the WGC’s director for the Asia-Pacific region (excluding China), anticipates that central banks will continue their buying spree of gold. In the first nine months of 2023, central banks acquired 634 tons of gold, maintaining a high level relative to pre-2022 trends. On October 30, 2023, gold prices closed at $4,023, increasing by $94 during trading, as the market returned beyond the $4,000 mark following Federal Reserve rate cuts.
Investor caution continues amid concerns about potential instability following a meeting between Chinese President Xi Jinping and US President Donald Trump.
