The World Gold Council report released Tuesday showed that gold demand last year reached its highest level since 2011, as well as record demand for the precious metal in the fourth quarter and the strongest gold demand among central banks since 1967.
The total global demand went up 18% to 4,740. According to the Full Year 2022 Gold Demand Trends Report, 7 metric tons were excluded in 2022, excluding over-the-counter trading. OTC trading is done without the oversight of an exchange.
In 2022, global gold demand was at its highest since 2011, when demand for gold was 4,764 excluding OTC trading. The report said 4 metric tons were produced. The fourth quarter of 2022 saw record demand of 1,337 metric tons.
Investment demand last year reached 1,107 metric tons, up 10% from a year ago. The report said that bar and coin demand increased 2% year on year to 1,217 metric tons, while holdings of physically-backed gold exchange-traded funds declined by 110 metric tons, or 3%, year on year. It is equivalent to outflows of $3 billion, according to the World Gold Council.
It said last year there was a second year-on-year increase in central-bank demand, which lifted annual buying among central banks to a 55 year high of 1,136 metric tons, with purchases coming from emerging-market banks such as China and Turkey.
It was not only the 13th consecutive year of net purchases among central banks but also the second highest level of annual demand since 1950, according to the report.
The report said that as investors settled the likely peak level of interest rates, rate hikes will pose less of a problem, despite the strong headwinds from rising rates and a strong dollar for most of the year. The World Gold Council said that continued weakness in the U.S. dollar, growing recession risks, a continued high bond-equity correlation and elevated geopolitical risk form the backbone of a positive tactical case for gold in 2023.
Central-bank demand is difficult to predict due to the slowing of growth in total reserves, but the World Gold Council said a slowing of growth in total reserves could put pressure on some central banks, reducing their capacity to allocate gold. It believes that 2023 central-bank buying will be more moderate. According to Dow Jones Market Data, the most active contracts GC 00, gold futures traded on Comex ended 2022 with a slight loss of 0.1%. The most active April contract, GCJ 23, was settled at $1,939. 20 an ounce was down $6.40, or 0.3%, for the session.