Central banks continue to increase gold purchases
The WGC's Gold Demand Trends Report said annual gold demand (excluding the OTC market) will fall to 4,448 tonnes in 2023, down 5% from a notable increase in 2022.
“ Including the OTC market and gold reserves (450 tonnes), total gold demand in 2023 rose to a record high of 4,899 tonnes ,” the WGC pointed out.
According to the WGC report, the central bank sector maintained its gold buying pace at a dizzying pace. Net gold purchases reached 1,037 tons, close to the 2022 record, just 45 tons less.
However, investment in gold bars and coins decreased slightly by 3% year-on-year as different trends in major markets in the West and East offset each other.
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| The average gold price in 2023 reached a historical high of 1,940.54 USD/ounce. |
“ Gold jewelry consumption remained stable at 2,093 tonnes despite very high gold prices. China’s recovery supported the strong growth in total global gold jewelry consumption ,” the WGC said.
According to the WGC, central bank gold reserves increased by 1,000 tons for the second consecutive year. And 2023 is the second year with the highest recorded demand for gold from central banks at 1,037 tons, down 45 tons compared to 2022.
Notably, the banks that bought the most gold were the Central Bank of China (buying an additional 225 tons in 2023) and the Central Bank of Poland (buying an additional 130 tons and increasing its gold holdings by 57%).
Mr. Shaokai Fan, Director of Asia-Pacific (excluding China) and Director of Global Central Banks at the World Gold Council, commented: “ Central banks will continue to be the main buyers of gold in 2024, and investment demand for gold will increase in the coming time because monetary policies in countries tend to loosen, so the purchase price of gold tends to decrease. The demand for gold investment will be increasingly greater, which is also a factor affecting gold prices in the coming time .”
“ Along with monetary policy, geopolitical uncertainty is often the main driver of gold demand. In 2024, we expect this to have a significant impact on the market. Ongoing conflicts, trade tensions and more than 60 elections around the world are likely to drive investors to gold, which has long been seen as a safe haven asset,” said Louise Street, senior market analyst at the World Gold Council.
Gold consumption demand in Vietnam slightly decreased
According to WGC, in Vietnam, overall gold consumption demand will decrease slightly, down 6% year-on-year from 59.1 tons in 2022 to 55.5 tons in 2023. Gold bars and coins will witness a slight decrease of 2% in 2023 from 41 tons in 2022 to 40.4 tons in 2023.
Meanwhile, gold investment in Vietnam improved in the fourth quarter as investors responded to price adjustments. However, increased demand and limited gold investment options led to a significant premium for SJC gold, reaching around $600-700/ounce.
In terms of gold jewelry demand is expected to decline significantly in 2023, down 16% to 15.1 tonnes. This decline is reflected in four consecutive quarters of year-on-year declines, due to slowing economic growth and relatively high inflation in the region.
Assessing the growth potential of the Vietnamese gold market in 2024, Mr. Shaokai Fan said: “ There is a lot of potential for Vietnam because Vietnam's population is currently increasing and the level of wealth of the people is also increasing, combined with favorable demographic factors and furthermore, Vietnam has consolidated its macroeconomic position. Therefore, the interest in investing in gold is also increasing, I am very optimistic about the prospects of the Vietnamese gold market .”
In Vietnam, gold prices are also predicted by experts to increase in 2024, due to the impact of world prices. In the next few months, demand for gold is forecast to be high as some Asian countries, including China and India, are at the peak of gold consumption this year.
According to a report by JPMorgan bank, gold prices will continue to increase due to the benefit of lower interest rates in 2024. Gold prices will tend to increase in the medium and long term. The increase in gold prices will last until 2025.
JPMorgan forecasts that the US Federal Reserve (FED) will cut interest rates by 1.25% in 2024. US core inflation will fall to 2.4% in 2024 and 2.2% in 2025, before reaching the 2% inflation target in 2026. Correspondingly, the FED will cut interest rates, which will be a growth driver for gold prices.
According to experts, the world gold price in 2024 will continue to increase, possibly reaching 2,300 USD/ounce. Sharing the same view, WisdomTree, a global exchange-traded fund, forecasts that gold will increase throughout 2024 and may conquer the level of 2,300 USD/ounce.
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