Gold supported in Q2 despite softer central bank demand

Central bank buying slowed in Q2 but remained resolutely positive. This, combined with healthy investment and resilient jewellery demand, created a supportive environment for gold prices.

Q2 gold demand (excluding OTC) dropped slightly by 2% y/y to 921t, driven by a marked deceleration in net central bank buying compared to above average purchases in Q2’22. Inclusive of OTC and stock flows, total demand strengthened 7% y/y to 1,255t.1  

Despite sales from Turkey in response to specific local market conditions, the 103t of net official sector purchasing in Q2 is in line with the underlying positive trend towards gold among central banks.  

Jewellery consumption managed a modest improvement despite the high gold price environment, up 3% y/y at 476t. With jewellery fabrication of 491t, inventories increased by around 15t in Q2, in part as Chinese jewellery consumption failed to meet the trade’s optimistic expectations.

Bar and coin investment increased by 6% y/y to 277t in Q2, with Turkey a major driver of growth. And while ETFs saw net outflows of 21t (concentrated in June) these were notably smaller than the 47t outflow in Q2’22.  

OTC investment jumped in Q2, reaching 335t. Although opaque, demand from this sector of the market was apparent as the gold price found firm support even in the face of ETF outflows and a reduction in COMEX net longs.

Demand for gold used in technology remained very soft thanks to continued weakness in consumer electronics; it held at just 70t for a second consecutive quarter.  

Total gold supply was 7% higher y/y at 1,255t, lifted by growth in all segments. Mine production is estimated to have reached a record for H1 of 1,781t. 


Firmer jewellery and investment demand helped offset slower central bank buying in Q2*

GDT Q2 2023: Front Cover

Sources: Metals Focus, Refinitiv GFMS, World Gold Council; Disclaimer *Data as of 30 June 2023.

Sources: Metals Focus, Refinitiv GFMS, World Gold Council; Disclaimer

*Data as of 30 June 2023.


The LBMA (PM) gold price averaged US$1,976/oz during Q2, a record high. This price was 6% higher y/y and 4% above the previous record high from Q3’20. Currency moves meant that several countries saw further strength in local gold prices, notably China and Turkey.

H1 gold demand (excluding OTC) was 6% lower at 2,062t. The y/y decline was largely explained by this year’s modest outflows from gold ETFs being compared with the strong surge of inflows in early 2022. Total demand in H1 (inclusive of OTC and stock flows) increased by 5% to 2,460t.  

Central bank gold buying in H1 reached a first-half record of 387t. Despite the Q2 slowdown, the strong Q1 start set the seal on a record-breaking H1. Buying activity remains widespread and distributed among both emerging and developed countries.

Local market conditions have driven exceptional gold demand in Turkey in recent quarters. Combined H1 jewellery, bar and coin demand reached 118t, the highest first half year since 2007 when Turkish lira gold prices were a fraction of their current record levels. Presidential elections, dizzying inflation and currency weakness all contributed to drive demand up.

Gold recycling for the first half was 9% higher y/y, with much of that growth coming from China and India. Base effects played a role in both markets, as recycling had been relatively weak in Q2’22. Recycling activity has yet to pick up, notably in Western markets, despite high gold prices and cost of living pressures. 

Gold supply and demand

TonnesQ2'22Q3'22Q4'22Q1'23Q2'23 y/y change
Mine production889.3950.4948.5857.1923.44%
Net producer hedging2-26.5-13.336.19.5383%
Total mine supply891.3923.9935.2893.2932.85%
Recycled gold285.3268.6290.7311.7322.313%
Total Supply1,176.61,192.51,225.91,204.91,255.27%
Jewellery fabrication493.5582.6601.9511.5491.30%
 Jewellery consumption461.7525.6628.5474.8475.93%
 Jewellery inventory31.857.1-26.736.715.4-52%
 Other Industrial11.411.311.711.611.61%
 Total bar & coin demand261.2347.9340.4304.5277.56%
  Physical Bar demand172.7225.5222.6183.4162.9-6%
  Official Coin70.889.48996.488.925%
  Medals/Imitation Coin17.63328.924.725.847%
 ETFs & similar products-47.4-244.1-89.6-28.7-21.3
Central banks & other inst.158.6458.8381.8284102.9-35%
Gold demand944.21,222.51,306.61,141.5920.7-2%
OTC and other232.5-30.1-80.763.4334.544%
Total Demand1,176.61,192.51,225.91,204.91,255.27%
LBMA Gold Price, US$/oz1,870.61,728.91,725.91,889.91,975.96%

Source: ICE Benchmark Administration, Metals Focus, World Gold Council

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