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Gold Demand Trends: Gold continues to perform as central bank buying hits H1 record 

The World Gold Council’s latest Gold Demand Trends report reveals that gold benefited from  record central bank buying in the first half of the year and was supported by healthy investment  markets and resilient jewellery demand. 

Gold demand (excluding OTC) dropped by 2% y/y to 921t during Q2, although total demand  (inclusive of OTC) was up 7% y/y, pointing to a solid gold market globally.  

Second quarter central bank demand was down y/y to 103t, primarily driven by net sales in  Turkey due to country-specific political and economic circumstances. However, central banks  bought a first half record amount of 387t, and quarterly demand is in line with the longer-term  positive trend – indicating that official sector buying should remain strong throughout the year.  

Turning to gold investment, bar and coin demand increased by 6% y/y to 277t in Q2, and a total  of 582t in H1, thanks to growth in key markets including the US and Turkey. Gold ETFs outflows  of 21t in Q2 were notably smaller than the 47t in the same quarter of 2022, bringing net outflows  to 50t in the first half of the year. 

Jewellery consumption remained resilient in the face of high prices, showing a 3% y/y increase at  in Q2 and an H1 total of 951t. A rebound in Chinese demand and remarkably strong consumer  buying in Turkey bolstered second quarter consumption. 

Finally, total gold supply was 7% higher y/y at 1,255t in Q2, with mine production estimated to  have reached a record for H1 of 1,781t.  

Louise Street, Senior Markets Analyst at the World Gold Council, commented: “Record central bank demand has dominated the gold market over the last year and, despite a slower pace in Q2, this trend underscores gold's importance as a safe haven asset amid ongoing  geopolitical tensions and challenging economic conditions around the world.” 

“Looking ahead to the second half of 2023, an economic contraction could bring additional upside for gold, further reinforcing its safe-haven asset status. In this scenario, gold would be supported by demand from investors and central banks, helping to offset any weakness in  jewellery and technology demand triggered by a squeeze on consumer spending.” 

Somasundaram PR, Regional CEO, India, World Gold Council said, “India’s gold demand in Q2 2023 dropped by 7% to 158.1t in comparison to Q2 previous year demand of 170.7t. The demand for gold jewellery in India experienced a notable decline of 8% y-o-y to 128.6t for Q2 2023. This decline can be attributed to the prevailing record high rupee gold prices, which significantly impacted affordability and consumer sentiment. The demand for investment too dropped marginally by 3% to 29.5t from 30.4t in Q2 2022. There was a brief but notable impact on gold demand following the kneejerk reaction to the ban of 2,000-rupee notes during the quarter. This highlights the sensitivity of Indian consumers to policy changes, which can have short-term effects on gold demand. While challenges related to high gold prices and inflation persisted, the supportive economic backdrop and consumer adaptability played a significant role in bolstering the market's resilience.


Gold recycling in India witnessed a sharp spike during the quarter, with an increase by 61% to 37.6t compared to the previous year. Many consumers would have opted to book profits from historic high gold prices.  


Looking ahead for rest of the year, we remain cautious about gold demand as it faces uncertainties due to elevated local prices and slowdown in discretionary spending.  However, the success of the monsoon season could bolster sentiment ahead of Diwali season and throw positive surprises. With H1 2023 demand at 271t, our estimate for full year gold demand is in the range of 650-750t in 2023.”

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