Annual global gold demand last year reached its highest since 2011, buoyed in part by record demand for the precious metal in the fourth quarter and the strongest gold demand among central banks since 1967, according to a World Gold Council report released Tuesday.
Total global demand climbed 18% to 4,740.7 metric tons in 2022, excluding over-the-counter trading, according to the the Full Year 2022 Gold Demand Trends Report, which marked its 30th anniversary. OTC trading is done between dealers directly, without the oversight of an exchange.
Global gold demand in 2022 was at its highest since 2011, when global demand, excluding OTC trading, totaled 4,764.4 metric tons, the report said. The fourth quarter of 2022 saw record demand of 1,337 metric tons.
Investment demand last year reached 1,107 metric tons, up 10% from a year earlier. Under that category, bar and coin demand was up 2% year on year to 1,217 metric tons, the report said, while holdings of physically-backed gold exchange-traded funds declined by 110 metric tons, or 3%, year on year. That’s equivalent to outflows of $3 billion, the World Gold Council said.
Still, last year saw a second straight year-on-year increase in central-bank demand, lifting annual buying among central banks to a 55-year high of 1,136 metric tons, it said, with purchases primarily coming from emerging-market banks such as Turkey and China.
“2022 was not only the 13th consecutive year of net purchases [among central banks], but also the second highest level of annual demand on record back to 1950,” the report said.
“Gold’s stable performance in 2022, despite strong headwinds from rising rates and a strong dollar for most of the year, has reignited investor interest,” the report said, and as investors have “settled the likely peak level of interest rates, rate hikes will pose less of a problem.”
Continued weakness in the U.S. dollar, growing recession risks, a continued high bond-equity correlation and elevated geopolitical risk “form the backbone of a positive tactical case for gold in 2023,” the World Gold Council said.
Central-bank demand, meanwhile, remains “difficult to forecast” partly because it can be policy driven, but the World Gold Council said a “slowing of growth in total reserves is likely to put pressure on some central banks, reducing their capacity to allocate to gold.” Given that, it believes that 2023 central-bank buying will be “more moderate.”
Based on the most-active contracts
gold futures traded on Comex ended 2022 with a slight loss of 0.1%, according to Dow Jones Market Data. On Monday, the most-active April contract
settled at $1,939.20 an ounce, down $6.40, or 0.3%, for the session.