Gold demand reached a new peak in 2022, boosted by a surge in purchases from central banks and investors seeking refuge from rising inflation. The World Gold Council (WGC) reported that demand for the precious metal rose by 19% to 4,740.7 tons, the highest level since 2011.
Central Bank Purchases Drive Gold Demand
Central bank purchases more than doubled to reach 1,136 tons, the highest total in over 50 years, due to the Ukraine war and inflation. According to WGC analyst Louise Street, gold is viewed as a long-term store of value that performs well in times of crisis. The current geopolitical and economic conditions have made gold a more attractive investment for those seeking stability and security.
Jewelry Demand Softens but Prospects Remain Optimistic
Gold jewelry demand softened slightly to 2,086 tons in the face of higher prices during the final quarter of 2022. However, the WGC remains optimistic about the demand prospects for 2023. The WGC stated that investment demand is expected to be supported by elevated recession and geopolitical risks, while jewelry demand is expected to benefit from continued recovery in China.
Central Bank Buying May Struggle to Match 2022 Gold Demand Level
The WGC warned that central bank buying could struggle to match the previous year’s level. Despite this, the gold price rebounded sharply in March 2022 after Russia’s invasion of Ukraine, but ended the year on a stable note with a 1.25% gain in value.
Conclusion
In conclusion, the World Gold Council reported that gold demand reached new heights in 2022, driven by central bank purchases and investment demand seeking protection from inflation. Despite mixed prospects for demand in 2023, the WGC remains optimistic about the potential for growth, driven by investment and recovery in China’s jewelry demand. However, central bank buying may not match the previous year’s level.
