5 May, 2023

Q1 saw diverging trends in gold investment demand: a small decline in gold ETF holdings versus hearty bar and coin buying.

  • Investment demand of 274t was up 9% on the previous quarter, but 51% lower y/y 
  • Holdings of global gold ETFs fell slightly during Q1 (-29t); outflows in January and February were partially reversed by inflows in March 
  • Global bar and coin investment exceeded 300t for a third consecutive quarter – the first time this has happened since 2013.
Tonnes Q1'22 Q1'23   YoY % change
Investment 558.4 273.7 -51
Bar & coin 287.7 302.4 5
  India 41.3 34.4 -17
  China, P.R.:Mainland 49.3 65.9 34
Gold-backed ETFs 270.7 -28.7 -

Source: Metals Focus, World Gold Council

Q1 witnessed a similar pattern of investment demand as in the previous quarter: bar and coin investment remained in rude health compared with outflows in ETFs and modest growth in OTC and futures. 

Sentiment in the more institutional segment turned markedly more positive in March as serious cracks emerged in the banking industry propelling the gold price higher. As well as monthly inflows into ETFs, March also saw a notable rebound in COMEX net longs, which ended the quarter at 622t – the highest for 10 months, although positioning remains below the average levels in 2021 (654t) and 2020 (872t).


Q1 saw net disinvestment of 29t from global physically-backed gold ETFs, equivalent to a US$1.5bn outflow. Although modest, this was the fourth consecutive quarter of net global outflows from gold ETFs and generated a material y/y decline compared with the very notable inflows of Q1’22.
But the quarter ended on a positive note: January and February outflows were followed by a March reversal – the first time in 11 months that ETF holdings increased. And, so far, that positive trend has continued in April. 


Global gold ETF outflows tapered off to trivial levels in Q1* 

GDT Q1 2023: Investment Chart 1

Sources: Bloomberg, Company Filings, ICE Benchmark Administration, World Gold Council; Disclaimer

* Data to 31 March 2023

As usual, ETF demand varied across regions. The majority of Q1 outflows came from European-listed products, while Asian funds saw only mild outflows. In contrast, North American-listed ETFs, as well as those listed in Other regions, witnessed inflows during the first quarter of 2023.

Funds listed in North America added 10t in Q1, a net inflow of US$829bn in AUM. Activity in this region was sensitive to moves in the US dollar and rate expectations, with inflows in January and March punctuated by outflows in February. The March banking mini-crisis was a defining factor in encouraging investment, as was with the rising gold price, which promoted momentum buying. 
Despite positive demand in March, gold ETFs listed in Europe saw net Q1 disinvestment of 40t. UK- and German-listed funds led the outflows, partly explained by the fact that these are two of the largest markets in the region. Sentiment appeared to be driven by continued substantial rate hikes across the region. The March recovery was a response to poor stock market performance, systemic risk fears from the banking crisis, and the 6% rise in the euro gold price during the month.

Asian-listed gold ETFs saw modest declines. Chinese and Indian funds both generated minor losses (<1t), which contrasted with small gains in Japan. Among the funds listed in Other regions, Turkey was the standout, with strong bar and coin demand. 1

Bar and coin

Investors bought 302t of gold bars and coins in Q1, 14% above the five-year average and equal to US$18.4bn in value. Strong gold prices – which reached record levels in some markets – encouraged some momentum buying. Demand was further fuelled by persistent high inflation, geopolitical risks and concern over contagion in the banking crisis. But demand failed to match the previous quarter’s levels, as high gold prices encouraged profit-taking and sharp declines were seen in a few key markets. 


Q1 bar and coin investment soared in China. Demand totalled 66t, a 34% jump y/y and a 7% rise q/q, mainly driven by China’s emergence from the COVID pandemic and the eye-catching gold price performance. 

Chinese New Year generated robust demand for gold investment, particularly given the local gold price strength, which outperformed relative to other domestic assets including stocks, bonds and commodities. Additions to official gold holdings reported by the PBoC  seemed to further encourage local interest in gold investment, as did elevated global geopolitical tensions. Furthermore, consumers’ high tendency to save may also have elevated their interest, as gold has historically been regarded as an effective store of value. 

Looking ahead, Q2 – a traditional low season for domestic gold demand – could see stronger than usual buying as investors may pay increasing attention to gold’s role as a safe haven in the environment of heightened geopolitical risk. Consumers' tendency to save also remains at a record level, supporting demand for gold over recent quarters. Headwinds may come from seasonality factors and high gold prices, which may deter some new investment.


Record high – and volatile – local gold prices in Q1 were the key driver of gold investment demand, which was relatively muted at 34t. This resulted in a 17% y/y decline and a steep 40% drop q/q. In comparison with longer-term trends, demand was 14% below the five-year quarterly average.

The speed and scale of the rise in the local gold price deterred fresh buying and instead encouraged profit-taking for many. Furthermore, the low margins on gold investment products, relative to jewellery, meant that retailers concentrated their promotional efforts on the latter. 

Economic momentum in India remains healthy and the RBI paused its rate hike cycle., Against this backdrop, the outlook for retail investment is highly dependent on the local gold price. Further volatility, at such extremely high price levels, would continue to act as a deterrent to bar and coin investors and further price gains would likely encourage profit-taking.

Middle East and Turkey

Bar and coin investment in Turkey reached phenomenal levels in Q1, breaching 50t for the first time on record. Demand increased fivefold y/y and was 32% higher q/q. In value terms, an unprecedented TL58bn (US$3bn) was invested in gold.

Turkish investors continued to seek the safety of gold as runaway inflation persisted: official statistics put CPI at around 50% (with unofficial estimates more than double that). Real rates consequently remain deeply negative, a fact that has helped gold’s case – as have the impending mid-May elections, the prospect of which further highlights gold’s safe-haven appeal. 

All markets across the Middle East recorded growth in Q1 bar and coin demand. Regional investment hit 29t – a quarterly total that has been exceeded on only three previous occasions. Rampant inflation and currency depreciation in some markets were key drivers, along with momentum buying into the rising gold price. 

In Egypt, a further currency depreciation (the third in less than a year) together with eye-watering inflation, underpinned the safe-haven and inflation-hedging motives for buying gold. Bar and coin demand doubled y/y to 7t.

Iran saw bar and coin investment of 13t – 26% higher than the 10t five-year quarterly average. Investment was spurred by a weak domestic currency, which fed through to soaring local gold prices, and extreme inflation. Disruption to the supply of gold coins has also pushed premiums up on these products.  

In Saudi Arabia, retail investment demand reached a seven-year high of 4t. Demand was 39% higher y/y, with investors apparently encouraged by the higher gold price, particularly as gold investment products are not burdened with the higher 15% VAT rate introduced in 2020. 


Biggest y/y changes in bar and coin investment* 

GDT Q1 2023: Investment Chart 2

Sources: Metals Focus, World Gold Council; Disclaimer

* Data to 31 March 2023

The West

There was a sharp disparity between US and European bar and coin demand in Q1. The banking failure in March lit a fuse under US bar and coin investors, who piled into gold. Investment in Germany, on the other hand, came to a virtual standstill as higher interest rates increased the opportunity cost of holding gold and high local gold prices encouraged profit-taking. 

US bar and coin demand jumped 40% q/q – a 4% y/y increase – to 32t, the fourth strongest quarter in our data series and the highest since 2010. This was almost double the five-year average of 17t.

The higher gold price continued to stoke interest in gold, although initially at a more measured pace than in recent quarters. The market burst into life in March as the collapse of SVB and Signature Banks put gold squarely in the spotlight. The US Mint reported rocketing coin sales, which reached 288,000 ounces in March – the biggest monthly total since October 1998, when the Y2K safe-haven rush for gold was in full swing.  

Demand remains healthy amid continued fears about the health of the banking sector, as well as concern around the forthcoming domestic debt ceiling negotiations and more general elevated global geopolitical tensions. Higher premiums on silver products are also reportedly supporting some substitution into gold.  

The Q1 picture for Europe was very different. Demand slumped to 38t, less than half that of Q1’22 and the lowest quarterly total since the pandemic began. 

Germany was the clear driver of the regional decline. Demand in this market fell to 13t, the lowest since Q2’08 and 63% below the five-year average of 34t. The main trigger for the collapse in investment appears to have been the shift back to positive real rates for the first time in nine years 2, due to easing inflation and higher nominal rates. The rising euro gold price in January also reportedly encouraged profit-taking, with the net result that demand was more or less zero during the month.

The banking crisis briefly revitalised demand in March but liquidations remained strong throughout the quarter and this prevented net demand from matching recent levels.

Switzerland recorded a significant, but smaller, 20% y/y decline. Demand slowed in January and February before returning with a vengeance in March as banking crisis contagion hit home.

The smaller markets of France, the UK and Italy bucked this trend and registered modest growth, likely as investors were attracted by the rising gold price. 

ASEAN markets

Bar and coin demand was mixed across the ASEAN markets covered in GDT. Vietnamese retail investment was down 10% y/y at 13t – the lowest first quarter since the pandemic-stricken 2020. The y/y decline partly reflected lower levels of liquidity among investors, whose equity and real estate investments in the last two years have not performed well. Demand was directed towards chi rings, given the high premiums charged on Saigon Jewellery Company tael bars2. High gold prices may deter investment in the coming months.

Thailand and Indonesia both witnessed y/y growth of 15% in retail investment. In Thailand, however, this was largely due to the comparison with a very weak base period. Q1 investment was negligible at less than 2t. The q/q comparison reveals an 83% drop as investors stood aside while the price spiked in March. 

 Indonesian bar and coin buying increased to 6t as rising gold prices, along with high inflation, encouraged investors. Strong q/q growth (+20%) also reflected the complete removal of the COVID-19 curbs at the end of last year. 

Rest of Asia

Japan saw a second consecutive quarter of net disinvestment in Q1, as the local gold price reached new record highs. Japanese investors sold a net 3t of gold bars and coins as they cashed in on their existing holdings. That being said, the modest degree of net selling was somewhat surprising and reflects a healthy underlying level of buying interest. 

Traditional Japanese investors tend to be older and have legacy holdings of gold bars and coins that they use as a source of liquidity. But growing interest has been reported among a younger cohort of investors who are increasingly interested in gold as an investment. And as the price has reached all-time highs, media interest has likely been generated, further raising gold’s profile.
South Korean bar and coin demand softened to 4t, a decline of 15% y/y. While some investors were cautious of buying at relatively high prices, others added to their holdings during price pullbacks, anticipating further price strength.


Our data series for Australia (back to Q1’21) has been revised higher on the basis of new information. Bar and coin demand was healthy at 6t but notably weaker than the very strong 8t of investment seen in Q1’22. The banking crisis helped to spur demand during March, despite the exceptional price rally during the month. 


  1. ‘Other’ regions include Australia, South Africa, Turkey, Saudi Arabia and the United Arab Emirates.

  2. German 10-year inflation-linked bond yields turned positive in December 2022 for the first time since Q1 2014.

  3. Chi rings are plain 24k gold rings and classified as jewellery. They require only crude workmanship and therefore command limited premiums, making them a popular investment proxy. ‘Tael bars’ are gold bars of 37.5 grams.