Mumbai: The World Gold Council’s (WGC) Q3 Gold Demand Trends report reveals that support for the asset continues as central bank buying maintains a historic pace, bringing quarterly gold demand (excluding OTC) to 1,147t, 8% ahead of its five-year average.

According to the WGC’s data series, central banks saw the third strongest quarter of net buying, reaching 337t. Although shy of breaking the Q3 2022 record, year-to-date demand has reached 800t, a new record for our data series. This strong buying streak from central banks is expected to stay on course for the remainder of the year, indicating a robust annual total again in 2023.

Investment demand over the quarter stood at 157t, a 56% increase year-on-year but weak compared to the five-year average. Falling demand in Europe weighed down Q3 bar and coin investment, although at 296t, demand is up on the previous quarter and notably above the five-year average. Gold ETFs saw continued outflows in Q3, largely driven by investor sentiment that interest rates will continue to stay high. However, continued strength in OTC investment resulted in 120t in the third quarter, driven in part by High Net Worth demand in Turkey and some stock building in other markets.

Jewellery demand remained resilient in the face of elevated gold prices, but there was a slight softening of jewellery consumption, down 2% y/y to 516t, due to cost of living pressures on consumers in many markets around the world.

Total gold supply rose 6% y/y in Q3, with mine production reaching a year-to-date record of 2,744t. A consistently high gold price helped prop up recycling to 289t, 8% higher y/y.

Louise Street, Senior Markets Analyst at the World Gold Council, commented, “Gold demand has been resilient throughout this year, performing well against the headwinds of high interest rates and a strong US dollar. Our report shows that gold demand is healthy this quarter, compared with its five -year average. Looking forward, with geopolitical tensions on the rise and an expectation for continued robust central bank buying, gold demand may surprise to the upside.”

Mr. Somasundaram PR, Regional CEO, India, WGC said, “India’s gold demand of 210t in Q3 2023 was higher by 10% over Q3 2022 of 191.7t. Purchase of gold jewellery in India was up 7% y-o-y aided by softer gold prices and festive demand, more pronounced in South India.

Investment gold demand, that is bars and coins, jumped 20% to 54.5t from 45.4t in Q3 of the previous year. Price correction was a major factor that triggered the latent demand which we believe continues to be strong underpinned by strong positive economic sentiment mixed with uncertainties arising from a variety of factors such as fear of inflation, below-normal monsoon and global developments. 

Gold recycling in India recorded 19.3t, a 20% growth over last year, which is more due to low base of last year and perhaps some profit taking. We believe recycling will continue to grow as initiatives of organised players to increase recycling of jewellery start gathering steam. With HUID in place, policy and tax incentives for recycling of HUID marked pieces can be enabled to grow recycling. 

Q4 will get the usual seasonal boost due to festivals and wedding purchases, however any sharp price rise could delay release of pent-up demand following a relatively weak H1. Trade feedback is that consumers have accepted the Rs 60,000/- per 10g price point so a downward correction could trigger a significant jump too. 

With first nine months demand at 481.2t, our estimate for full year gold demand is in the range of 700-750t, marginally lower than last year demand of 774t.”

India Demand Statistics for Q3 2023 (July – September):

• Demand for gold in India for Q3 2023 was at 210.2 tonnes up by 10% as compared to overall Q3 demand for 2022 (191.7 tonnes)
• India’s Q3 2022 gold demand value was Rs 188,400 crores, up by 28% as compared to Q3 2022 (Rs 147,220 crores)
• Total Jewellery demand in India for Q3 2023 increased by 7% at 155.7 tonnes as compared to Q3 2022 (146.2 tonnes)
• The value of jewellery demand was Rs 139,550 crores, up by 24% from Q3 2022 (Rs. 112,330 crores)
• Total Investment demand for Q3 2023 at 54.5 tonnes increased by 20% in comparison to Q3 2022 (45.4 tonnes)
• In value terms, gold Investment demand in Q3 2023 was Rs. 48,850 crores, up by 40% from Q3 2022 (Rs. 34,900 crores)

• Total gold recycled in India in Q3 2023 was 19.2 tonnes, up by 20% compared to 16 tonnes in Q3 2022
• Total gold imports in India in Q3 2023 was 220 tonnes, up by 19% compared to 184.5 tonnes in Q3 2022