Global Gold Demand Hits Record High

Global demand for gold has reached an unprecedented high in the third quarter of 2023. The World Gold Council (WGC) reported a demand of 1,313 tons, marking the highest quarterly level ever recorded. This represents a 3% increase in volume and a 44% increase in value compared to the previous year.

Key Drivers of Increased Gold Demand

The surge in gold demand can be attributed to several factors. The ongoing geopolitical instability and fluctuations in currency values have intensified interest in gold as a safe investment. A weakening US dollar coupled with a fear of missing out (FOMO) has driven many to invest in gold as prices rise.

• Investment Demand: There was a significant increase of 47% in investment demand, totaling 537 tons, which constitutes 55% of overall demand.
• Central Banks: Net gold purchases by central banks reached 220 tons, a 10% increase, even as prices continue to rise.
• Gold Bar and Coin Demand: Demand for gold bars and coins rose by 17% in the same period.
• Gold Exchange-Traded Funds (ETFs): Investments in physical gold ETFs surged by 134%.
• Jewelry Demand: However, demand in jewelry manufacturing fell by 23%, down to 419.2 tons.

Gold Prices Reach Record Highs

This year has seen gold prices soar, achieving a notable milestone on October 20, when spot prices hit a record $4,381 per ounce. As of October 30, gold prices were trading at $4,023 after a $94 increase, following a Federal Reserve interest rate cut. Investor caution remains due to potential instability stemming from high-level geopolitical meetings.

Future Outlook for Gold Demand

Analysts believe the gold market still has room for growth. Louise Street, a senior analyst at WGC, expressed optimism regarding future demand. The combination of a weak dollar, expectations of lower interest rates, and the risk of stagnation may further boost investment in gold.

Fan Shaokai, Director for the Asia-Pacific region (excluding China) at WGC, also anticipates that central banks will continue their gold purchasing streak. In the first nine months of 2023, central banks acquired 634 tons of gold. While this does not break the three-year record, it remains significantly higher than pre-2022 levels.

The global gold demand outlook appears robust as investors look to secure their assets amidst economic uncertainties. The WGC’s insights underline a vibrant gold market with increasing prospects for the future.