Central Banks Continue to Increase Gold Holdings
According to the World Gold Council’s third-quarter report, central banks around the world purchased a total of 337 metric tons of gold, indicating a strong and sustained demand for the precious metal. While this figure fell just short of the record set in the same quarter last year, it has pushed year-to-date purchases to a record high of 800 metric tons. The report suggests that this consistent central bank activity is likely to result in another strong year-end total for 2023.
Gold Demand Surpasses Five-Year Average
The report also highlights that gold demand in the third quarter exceeded its five-year average by 8% when excluding over-the-counter transactions. Despite a 6% year-over-year decrease, overall demand reached 1,147 metric tons. When including OTC and stock flows, demand rose by 6% from the previous year, totaling 1,267 metric tons.
Rise in Gold Investment Demand
Gold investment demand in the third quarter saw a significant increase of 56% compared to the previous year, totaling 157 metric tons. However, it fell short of the five-year average of 315 metric tons. Additionally, gold exchange-traded funds (ETFs) experienced a decrease of 139 metric tons in the third quarter, although this was less than the outflow seen in the same period last year.
Positive Performance Amid Economic Uncertainty
Despite economic uncertainty and escalating tensions in Israel, both gold and bitcoin (BTC) have seen their values climb. Over the past month, gold has appreciated by 9.4%, while BTC has surged by 25%. U.S. stocks have also shown resilience, finishing strong as Treasury yields retreated.
Hot Take: Central Banks Driving Strong Demand for Gold
The World Gold Council’s report highlights the steady appetite of central banks for gold, indicating a sustained demand that is likely to result in another strong year-end total for 2023. While gold investment demand fell short of its five-year average, overall demand surpassed expectations. With economic uncertainty prevailing, both gold and bitcoin have seen positive performance, while U.S. stocks have remained resilient.
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