Expected to remain strong throughout the year, World Gold Council: Global central bank gold purchases reached a historic high in the first half of the year ETF | Gold | Global
The global central bank's gold purchase volume reached a new historical high in the first half of this year.
On August 1st, the World Gold Council released its latest "Global Gold Demand Trends Report", which showed that the global gold market has shown good momentum thanks to the record high global central bank gold purchases in the first half of this year, as well as the continuous growth of global gold investment and gold jewelry consumption demand.
According to the report, the demand for gold in the second quarter was 921 tons, a slight decrease of 2% year-on-year; However, the total demand for gold, including over-the-counter trading, increased by 7% year-on-year, indicating that the global gold market remains stable. The total global demand for gold in the first half of the year was 2062 tons, a year-on-year decrease of 6%; The total demand for gold in the first half of the year, including over-the-counter trading, reached 2460 tons, a year-on-year increase of 5%.
In terms of gold purchase demand, the central bank's gold purchase demand in the second quarter decreased to 103 tons compared with the same period last year, mainly because the central bank of Türkiye sold a large amount of gold. Nevertheless, global central bank demand for gold continued to reach a record high of 387 tons in the first half of the year, and demand in the second quarter showed a clear positive trend in the long term, indicating that official gold demand is likely to remain strong throughout 2023.
In terms of global gold investment, thanks to the growth of key markets including the United States and Türkiye, the demand for gold bars and coins reached 277 tons in the second quarter, up 6% year on year; The total demand for gold bars and coins in the first half of the year reached 582 tons. In the second quarter, the global gold ETF outflow was 21 tons, significantly lower than the 47 tons in the same period of 2022; The cumulative net outflow in the first half of the year was 50 tons.
Specifically, in the Chinese market, there was a significant decline in domestic demand for gold jewelry and gold investment in the second quarter of this year compared to the previous quarter. However, due to the low base factor of last year, the domestic demand for gold jewelry in China still increased by 28% year-on-year to 132 tons in the second quarter of 2023.
According to the analysis of the World Gold Council, compared to last year's lower base, domestic gold jewelry demand in China rebounded year-on-year in the second quarter of 2023; However, due to seasonal factors and rising domestic gold prices, the demand for gold jewelry in the second quarter decreased compared to the first quarter. But overall, in the first half of the year, domestic demand for gold jewelry in China increased by 17% year-on-year to 328 tons.
However, the World Gold Council also stated that domestic demand for gold jewelry in China has not yet recovered to the average level in 2021 or 10 years. This is mainly because, on the one hand, the historically high gold price has affected the demand for gold jewelry; On the other hand, the increase in consumer spending on tourism and other forms of entertainment has also seized the consumption space of gold jewelry.
According to data from the World Gold Council, in the second quarter, gold ETFs in the Chinese market flowed out again, and the asset management scale decreased to 22 billion yuan; In the first half of the year, there was a total outflow of approximately 521 million yuan, equivalent to a decrease of 1.3 tons in holdings.
"The profit taking caused by the 2% increase in gold prices may have driven the outflow of gold ETFs this quarter," the World Gold Council believes, but the magnitude is limited as the demand for safe haven gold and the outstanding performance of RMB gold prices still keep most investors holding their gold ETF shares.
In addition, in terms of central bank gold purchases, China's official gold reserves increased for the eighth consecutive month in June. As of the end of June, China's official gold reserves were 2113 tons, with an increase of 45 tons in the second quarter; In the first half of the year, the People's Bank of China reported a total of 103 tons of gold purchases, while in the past eight months, it has accumulated 165 tons of additional reserves.
Looking ahead to the future, Wang Lixin, CEO of the World Gold Council in China, stated that seasonal factors indicate that gold demand may rebound after the second quarter. Given the low base in 2022, the year-on-year growth rate in 2023 is expected to reach double digits. In terms of gold jewelry, various consumer stimulus policies may contribute to the growth of gold jewelry demand, but factors such as high domestic gold prices may hinder the growth of gold jewelry demand. In terms of gold investment, market risk aversion may provide support for gold retail investment.