The robust demand for gold investment seen in the first three quarters of the year is expected to continue as economic and geopolitical uncertainties could boost investors’ safe-haven buying, leading to a rise in sales of gold coins and bars, experts said on Tuesday.
The precious metal’s appeal to investors could be further boosted if central banks continue to buy gold, they said.
Demand for gold bars and coins in China jumped to 82 tonnes in the third quarter, despite soaring gold prices, marking a remarkable 66 per cent increase on a quarter-on-quarter basis and a 16 per cent year-on-year rise from the high base of the third quarter of 2012, according to a report released on Tuesday by the World Gold Council.
The report highlighted that this was the strongest third-quarter performance since 2018, well above the five-year average of 64 tonnes and the 10-year average of 61 tonnes.
Cumulatively for the first nine months, China’s demand for gold bars and coins reached 197 tonnes, a robust 26 per cent growth compared to the same period in 2022, according to the report.
“The rising interest in gold bars and coins was mainly driven by investors’ safe-haven demand, supported by global geopolitical instability and the weak performance of investment products denominated in Chinese yuan,” said Wang Lixin, CEO of WGC (China).
Wang pointed out that ongoing central bank purchases of gold may have spurred investor interest in the yellow metal.
According to the report, global net central bank purchases of 337 tonnes represented the third strongest quarter in WGC’s recorded history, although it fell short of the 459 tonnes recorded in the third quarter of last year. However, year-to-date central bank demand was 14 per cent higher than the same period last year at a record 800 tonnes.
Wang said the difference between domestic and international gold prices was another reason for the boom in gold investment demand. On 14 September, the one-day price differential hit an all-time high of $121 an ounce.
The benchmark LBMA (London Bullion Market Association) pm auction gold price averaged $1,928.5 per ounce. While this was 2 per cent down on the record high set in the second quarter of this year, it still represented a 12 per cent increase on the same period last year.
In terms of gold jewellery, China’s total demand in the third quarter was 154 tonnes, down 6 per cent on the same period last year. However, it was up 16 per cent on the second quarter, the WGC report said. In the first nine months, China’s total gold jewellery demand reached 481 tonnes, up 8 per cent year on year.
Wang explained that the economic recovery was a major driver of the rebound in domestic gold jewellery demand. The pent-up demand for wedding jewellery since last year also boosted gold jewellery consumption. Compared with other types of goods, the financial value of gold jewellery has contributed to its popularity, which has boosted consumers’ willingness to spend.
