The World Gold Council’s Gold Demand Trends report for 2023 highlights a 9% increase in consumer gold demand in Thailand, driven by rising bar and coin demand. Globally, annual gold demand, excluding Over The Counter (OTC), fell by 5%, but total demand reached a new record when factoring in OTC markets.
- Thailand saw the highest increase in consumer gold demand among ASEAN markets in 2023. This was driven by the depreciation of the local currency, leading to a rise in bar and coin demand, despite a decrease in jewelry demand.
- Global gold demand, excluding Over The Counter (OTC), fell to 4,448t in 2023, but total demand reached a new annual record of 4,899t due to investment from OTC markets, central bank buying, and other sources.
- Central bank buying remained strong, offsetting declines in Gold Exchange Traded Fund (ETF) outflows, with Thailand showing a Q4 recovery in gold jewellery demand but experiencing an overall decline for the full year.
Central bank buying remained strong
Central bank buying remained strong, while Gold Exchange Traded Fund (ETF) outflows continued. Bar and coin investment globally was subdued, with Thailand being the only ASEAN country showing positive growth. Jewelry demand rose slightly, driven by China, while mine production and recycling also increased. The report suggests that central bank demand will continue to support the gold market in the face of geopolitical uncertainty and economic slowdown.
The central bank buying streak continued on from 2022 at a blistering rate. Demand reached 1,037t last year, making it the second highest on record, down just 45t on the previous year.
Gold Exchange Traded Fund (ETF) outflows continued
In contrast to robust OTC and central bank demand, Gold Exchange Traded Fund (ETF) outflows continued in 2023, losing 244t in a third consecutive year of decline, with outflows in Europe dominating the picture.
Turning to bar and coin investment, global demand was subdued and down 3% as strength in some markets worked to offset weakness elsewhere. Thailand, however, had the strongest 2023 growth performance in the ASEAN region and remains the only country with positive growth for 2023 in the area. Bar and coin demand in Thailand grew by 13% year-on-year from 29t in 2022 to 32.9t in 2023. Nevertheless, demand remains weak compared to the pre-COVID average of 63t per year from 2015 to 2019.
Depreciation of local currency supported Thailand demand
“The steady depreciation of local currency during 2023 supported Thailand demand, particularly against a fragile economic backdrop. The reasons for lower demand may lie in the increased popularity of online investment platforms, which allow for greater short-term gold trading at the expense of a ‘buy and hold’ approach”.
Mr. Shaokai Fan, Head of Asia-Pacific (ex-China) & Global Head of Central Banks at the World Gold Council
In other ASEAN markets, including Vietnam, Malaysia, Indonesia, and Singapore, bar and coin demand dropped by 2%, 4% 5%, and 8% respectively year-on-year. European demand continued to plummet, down 59% year-on-year. This decline was offset by a strong post-COVID recovery in China, where annual demand was up 28% to 280t; combined with notable increases in India (185t), Turkey (160t), and the US (113t).
The global jewellery market proved to be remarkably resilient amidst record-high prices as demand inched up by 3t year-on-year. China played an important role, recording a 17% increase in demand for gold, as it recovered from COVID-19 lockdowns, offsetting a 9% decrease in India.
Q4 recovery in Thailand’s gold jewellery demand
A Q4 recovery in Thailand’s gold jewellery demand (from 2.5t in Q3 2023, to 3.0t in Q4 2023) failed to prevent a full-year decline. Annual demand slipped 2% to 9t, despite a surge during October and November in response to a price drop.
“During the fourth quarter higher Thai agricultural prices sparked an improvement in rural demand, which had lagged behind urban demand throughout the year. However, jewellery recycling volume in Thailand climbed during 2023 as rising gold prices drew out existing holdings,” Mr. Fan, added.
Mine production was relatively flat in 2023, up 1%. Recycling increased by 9%, which was lower than expected given the high gold price and drove total supply up 3%.
“Unwavering demand from central banks has been supportive of gold demand again this year and helped offset weakness in other areas of the market, keeping 2023 demand well above the ten-year moving average.”
Louise Street, Senior Markets Analyst at the World Gold Council
“In addition to monetary policy, geopolitical uncertainty is often a key driver of gold demand and in 2024 we expect this to have a pronounced impact on the market. Ongoing conflicts, trade tensions and over 60 elections taking place around the world, are likely to encourage investors to turn to gold for its proven track-record as a safe haven asset.
“We know that central banks often cite gold’s performance in times of crisis as a reason to buy, which suggests demand from this sector will stay high this year and may help to offset a slowdown in consumer demand due to elevated gold prices and slowing economic growth.”
The Gold Demand Trends Q4 and FY 2023 report, which includes comprehensive data provided by Metals Focus, can be viewed here.
