Trends in Gold Demand in the Second Quarter of 2023

Despite weaker central bank demand, gold held up in the second quarter.

Central bank purchases fell in the second quarter but remained steadfastly positive. This, together with solid investment and strong jewelry demand, produced a favorable climate for gold prices.

Q2 gold demand (excluding OTC) fell by 2% year on year to 921t, owing to a significant slowdown in net central bank purchases compared to above-average purchases in Q2 ’22. Total demand increased 7% year on year to 1,255t, including OTC and stock flows.  

Despite sales by Turkey in reaction to unique local market conditions, the 103t of net official sector purchasing in Q2 is consistent with central banks’ underlying favorable tendency toward gold.  

Despite the high gold price environment, jewelry consumption increased by 3% year on year to 476t. With 491t of jewelry manufactured, stocks climbed by roughly 15t in Q2, owing in part to Chinese jewelry consumption failing to match the trade’s bullish expectations.

In Q2, bar and coin investment climbed by 6% year on year to 277t, with Turkey being a major driver of growth. And, while ETFs had net withdrawals of 21 trillion (concentrated in June), this was far less than the 47 trillion outflow in Q2’22.  

OTC investment increased by 335 percent in Q2. Despite being opaque, demand from this area of the market was evident as the gold price maintained steady support despite ETF outflows and a decrease in COMEX net longs.

Due to persistent weakness in consumer electronics, demand for gold used in technology remained very sluggish, remaining at only 70t for the second straight quarter.  

Total gold supply increased by 7% year on year to 1,255t, driven by growth in all segments. Mine output is expected to have achieved a new high of 1,781t in H1.