Global gold demand hit 11-year high in 2022 on retail and central bank purchases

Demand for bars and coins rose amid inflationary concerns, World Gold Council says

Gold demand rose by 18 per cent in 2022 to an 11-year high of 4,741 tonnes, driven by retail investors and central banks shoring up their bullion reserves, according to the World Gold Council.

Annual central bank demand for gold more than doubled to 1,136 tonnes last year its biggest yearly increase since 1967 from 450 tonnes the year before, amid geopolitical uncertainty and high inflation, the WGC said in its annual report on Tuesday.

Among the central banks that bought gold last year were those in Turkiye, China, Egypt and Qatar.

Investment demand for gold in 2022 was up 10 per cent from the previous year, the report said.

Retail investor demand was driven by a notable slowdown in exchange-traded fund (ETF) outflows and strong gold bar and coin demand, it added.

Brisk retail investment lifted bar and coin demand to a nine-year high. Strong growth in Europe, Turkey and the Middle East offset a sharp slowdown in China, where demand was dragged down by Covid-19-related factors, according to the WGC.

“Last year, we saw the highest level of annual gold demand in over a decade, driven in part by colossal central bank demand for the safe-haven asset,” said Louise Street, senior markets analyst at the WGC.

“Gold’s diverse demand drivers played a balancing act as rising interest rates prompted some tactical ETF outflows, while elevated inflation spurred on gold bar and coin investment.

“The need for wealth protection in the global inflationary environment remained a primary motive for gold investment purchases.”

Global gold demand hit 11-year high in 2022 on retail and central bank purchases 2

A slowdown in US Federal Reserve interest rate increases is expected to boost the gold price.

Gold, which pays no interest, tends to benefit when interest rates are low as it reduces the opportunity cost of holding bullion.

Global economic growth is projected to rebound to 3.1 per cent in 2024, the International Monetary Fund said in its World Economic Outlook report released on Tuesday.

The IMF raised its global economic growth estimate for this year by 0.2 percentage points to 2.9 per cent from its October forecast, a slowdown from the 3.4 per cent expansion in 2022 and below the historical average of 3.8 per cent over the 2000-2019 period.

The fund said better economic data in the third quarter of last year, cooling inflation and the reopening of China point to resilience in the global economy.


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