Growing world demand for gold amid banking sector turmoil and geopolitical tensions

The international demand for gold from traders is witnessing an increase as a outcome of instability within the banking sector, geopolitical tensions, and a difficult economic environment, prompting people to turn to the precious metal as a safe-haven asset, based on the World Gold Council (WGC).
The WGC’s most up-to-date Gold Demand Trend report revealed that demand for gold bars and coins rose by 15% year-on-year to 1.9 tonnes in the first quarter of 2023 from 1.6 tonnes a yr prior. Meanwhile, domestic jewelry demand skilled a 6% decline throughout the identical interval, all the method down to 2.1 tonnes.
Overall shopper demand for gold in the nation elevated by 3% from the identical timeframe in 2022, reaching 3.9 tonnes, as famous in the report released on Tuesday.
The driving forces behind this 6% year-on-year drop in Thailand’s jewelry demand during Q1 have been rising gold prices and increased costs of residing, acknowledged Shaokai Fan, the council’s head of Asia-Pacific area (excluding China) and advisor to central banks.
Globally, central banks contributed to a record-high demand by including 228 tonnes to their reserves.
Fan highlighted that “sustained and vital purchases from the official sector emphasise gold’s role in worldwide reserve portfolios throughout occasions of market volatility and heightened danger.”
He also noted that investment demand encountered a combined landscape throughout Q1. In March, the US economy’s systemic threat primarily drove renewed inflows into gold-backed exchange-traded funds (ETFs), which partially counterbalanced January and February outflows. This resulted in a modest decline of 29 tonnes in quarterly outflows.
Meanwhile, bar and coin funding saw a 5% year-on-year improve to 302 tonnes, Fan added.
Sneak peek , a senior markets analyst at WGC, confirmed that the optimistic demand for gold ETFs persists into the second quarter.
“As the specter of developed market recession looms, inflows might accelerate later in the 12 months,” she advised.
Despite probably lower ranges compared to the report highs of last yr, central bank purchases are anticipated to stay robust and serve as a requirement cornerstone throughout 2023, Street added.
She emphasised the probability of funding demand progress this year, considering the diminishing headwinds from both the strong US dollar and interest rate hikes..

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