The World Gold Council (WGC) reports that a record 399 tonnes of gold were purchased by central banks for around $20 billion during the third quarter of 2022, which contributed to an increase in the demand for the metal internationally.
In addition, jewellery stores and consumers of gold bars and coins increased their demand for gold, but exchange traded funds (ETFs), which store bullion for investors, decreased, says WGC’s most recent quarterly report.
Gold is typically seen as a safe asset for times of unpredictability or instability, despite the fact that many financial investors sold shares in gold-backed ETFs when interest rates rose and returns on other assets rose.
ETFs selling bullion caused an 8% drop in gold prices in the third quarter, however the WGC reports that this price drop also increased demand for jewellery.
Global demand for gold jumped by 28% from the same period in 2021, when it was 922 tonnes, to 1,181 tonnes in July–September, according to the WGC.
It stated that in the year prior to September, demand had increased to pre-pandemic levels.
The WGC reports that the third quarter’s central bank purchases totaled 673 tonnes, which is more than any full year’s worth of purchases since 1967.
Among the top purchasers were the central banks of Turkey, Uzbekistan, Qatar, and India.
Turkey had a dramatic increase in the acquisition of gold bars and coins from quarter to quarter, reaching 46.8 tonnes, up more than 300% from year to year as people bought gold to ward off rising inflation.
Looking ahead, we expect central bank purchases and retail investment to remain robust, says WGC analyst Louise Street.
‘We also expect the jewellery market to perform substantially in some regions, such as India and Southeast Asia,’ she added.