Record demand for gold pushes prices to all-time high

Demand for gold jewelry in Vietnam has decreased significantly.

According to the World Gold Council's recently released Gold Demand Trends Report, annual gold demand (excluding the OTC market) is set to fall to 4,448 tonnes in 2023, down 5% from a notable increase in 2022.

However, when including demand from the off-exchange market and other sources, total gold demand rose to a new annual record of 4,899 tonnes.

In Vietnam, gold consumption demand in 2023 generally decreased slightly, down 6% compared to the same period last year.

Investment from this informal demand source has pushed the average annual gold price in 2023 to a record high. Specifically, the average gold price in 2023 is $1,940.54/ounce, 8% higher than in 2022.

From 2022, central banks will continue to buy gold at a dizzying pace, bringing gold demand in 2023 to a second record high of 1,037 tons, down 45 tons compared to 2022.

Gold fluctuations on February 2: Record demand pushes gold prices to historic high

In Vietnam, overall gold consumption demand in 2023 decreased slightly, down 6% year-on-year; from 59.1 tons in 2022 to 55.5 tons in 2023. Gold bars and coins had a slight decrease of 2% in 2023 year-on-year, at 40 tons.

According to the World Gold Council, Vietnam has seen a significant decline in demand for gold jewelry, down 16% to 15 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.

Notably, gold investment in Vietnam increased sharply in the fourth quarter of 2023 due to price adjustments. Mr. Shaokai Fan, Director of Asia-Pacific (excluding China) and Director of Global Central Banks at the World Gold Council, said: "In the fourth quarter of 2023, Vietnam experienced an increase in gold investment due to price adjustments.

However, increased demand and limited gold investment options have resulted in a significant premium for SJC gold bars, reaching around $600-$700/ounce. The continuous depreciation of the local currency throughout 2023 has continued to boost demand, especially in the context of a fragile economy."

Geopolitical instability to boost gold demand in 2024?

According to the World Gold Council, in 2023, global investment demand for gold bars and coins "cooled down", down 3%. In the ASEAN markets including Vietnam, Malaysia, Indonesia and Singapore, demand for gold bars and coins decreased by 2%, 4%, 5% and 8% respectively compared to the same period last year.

Ongoing conflicts, trade tensions and more than 60 elections taking place around the world are likely to push investors to gold in 2024

European gold investment demand continued to decline sharply, down 59% year-on-year. This decline was offset by a strong post-Covid-19 recovery in China, where annual retail gold investment demand rose 28% to 280 tonnes; combined with notable increases in India (185 tonnes), Türkiye (160 tonnes) and the US (113 tonnes).

Meanwhile, the global gold jewellery market showed significant potential for recovery amid record prices as demand increased by 3 tonnes year-on-year. China played a key role, recording a 17% increase in gold demand as the country recovered from the Covid-19 lockdown, offsetting a 9% decline in India.

“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,” said Louise Street, senior market analyst at the World Gold Council. “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.

We know that central banks often cite gold’s performance in times of crisis as a reason to buy. This suggests that demand from this sector will remain strong this year and could help offset the decline in consumer demand due to higher gold prices and slower economic growth.”

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