Quick Bites | Update on gold demand

The World Gold Council has released an update on annual global gold demand, which hit an 11-year high in 2022, driven by a surge in buying by central banks and retail investors.

Source: World Gold Council

Demand for gold rose 18% last year to 4,741 tons, just short of 2011’s record. A quarter of that demand came from investors and central banks, with the latter buying more gold than at any other point in the last 55 years. Central banks purchased almost as much gold in the third and fourth quarters (445 tons and 417 tons, respectively) as they did throughout all of 2021 (450 tons). The Central Bank of Turkey alone bought 542 tons in 2022.

Gold is favoured by central banks and investors around the world as a safe haven thanks to its finite supply and real-world applications. As a result, gold has delivered positive returns in five of the last seven recessions. Gold demand could also be propped up by a weakening US dollar, which effectively lowers the cost of dollar-denominated gold to non-U.S. buyers.

On the other hand, higher interest rates could raise gold’s opportunity cost and falling inflation expectations could weigh on demand from retail investors, potentially generating headwinds for gold.

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