Global gold demand to hit record high in 2023

Geopolitical tensions and a weakening Chinese economy are causing investors to seek refuge in gold, the World Gold Council (WGC) said.

The WGC's Gold Demand Trends 2023 report, released on January 31, showed that the total volume of gold traded globally last year reached 4,899 tonnes, 158 tonnes higher than in 2022.

The biggest factors driving gold demand in 2023 are the Russia-Ukraine war, the Israel-Hamas conflict and China's economic slowdown. These factors could continue to drive gold prices in 2024, said Shaokai Fan, director of central bank research at the WGC.

Global spot gold prices hit a record high in December 2023, as central banks and individual investors increased their purchases of gold. Global central banks' purchases exceeded 1,000 tons for two consecutive years.

"2023 is the second-largest year for central bank gold purchases on record, just behind the record set in 2022," Fan said in an interview with CNBC.

The report also showed that China's central bank was the biggest buyer of gold, buying 225 tonnes last year. This brought its reserves to 2,235 tonnes.

"When central banks buy large amounts of gold, individual investors will also pay attention to this instrument. They can see it as a personal investment instrument," Fan said. China's real estate crisis has also made investors look for gold more.

Chinese investment in gold bars and coins rose 28% from 2022 to 280 tonnes last year. “Chinese investors are worried about the prospects of other assets, so they are turning to gold to preserve the value of their portfolios,” Fan said.

WGC data also shows that China has surpassed India to become the world's largest buyer of gold jewelry. In total, Chinese people bought 603 tons of gold jewelry in 2023, up 10% from the previous year.

This year, the WGC believes that gold demand will struggle to reach 2023 levels as inflation cools. "In times of high inflation, gold prices perform quite well. But when inflation goes down, prices can go up or down, depending on other factors," Fan said.

Ha Thu (according to CNBC, WGC)

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