Following a historical high level of central bank gold buying, gold continues to be viewed favourably by central banks. Our 2023 survey revealed that 24% of central banks intend to increase their holding reserves in the next 12 months.
Continued momentum in central bank buying and resurgent Chinese consumer demand contrasted with a negative contribution from ETFs and weakness in India.
Global physically backed gold ETFs saw net inflows of US$1.9bn in March - the first inflows for ten months - as the banking crisis fuelled demand. But the recent inflows were not enough to prevent a net quarterly outflow of US$1.5bn. Regionally, European funds accounted for the bulk of the global outflows in Q1.
Global physical gold ETFs saw another outflow of US$1.7bn (-34t, 1.0%), their tenth consecutive monthly loss. Outflows were widespread, with the exception of funds in the Other region.
Global physically backed gold ETFs kicked off 2023 with net outflows of US$1.6bn in January and a 26t (-0.8%) decline in total holdings to 3,446t. While the gold price witnessed its strongest January in a decade, registering a gain of 6.1%, gold ETF outflows in Europe and Asia dwarfed positive demand in North America and the Other region.
Colossal central bank purchases, aided by vigorous retail investor buying and slower ETF outflows, lifted annual demand to an 11-year high. Annual gold demand (excluding OTC) jumped 18% to 4,741t, almost on a par with 2011 – a time of exceptional investment demand. The strong full-year total was aided by record Q4 demand of 1,337t.
Physically-backed gold ETFs saw their holdings fall by 110t in 2022, down 3% y-o-y and equivalent to outflows of US$3bn.
The global economy is at an inflection point after being hit by various shocks over the past year. The biggest was induced by central banks as they stepped up their aggressive fight against inflation.
Gold fell 2% in October on rising bond yields and dollar strength, but it was positively impacted by higher breakeven inflation. But a weaker US dollar vs. euro and lower ETF outflows provided some support
Gold demand (excluding OTC) in Q3 was 28% higher y-o-y at 1,181t. Year-to-date (y-t-d) demand increased 18% vs the same period in 2021, returning to pre-pandemic levels.