According to Reuters, global demand for gold decreased significantly in Q1 2023 as investors cut long positions on the precious metal. Interestingly, central banks and Chinese consumers exhibited strong demand for gold.
The World Gold Council (WGC) estimated that the overall volume of gold bought equaled 1,081 metric tons in Q1 2023, 13% lower than in Q1 2022. Experts say that 50% of the metal was bought by jewelers. The remaining half of gold purchases was made by investors and government agencies.
Central banks added 228 metric tons of gold to their national reserves in the first three months of the year. Amid high demand in China, private buyers purchased 198 tons as gold jewelry. Bank jitters in the US in March boosted demand for gold among private consumers who purchased 32 tons of bullion and coins.
Experts pointed out that the situation was the opposite in Europe and India. Gold purchases went down sharply. At the same time, ETFs storing gold bullion for investors were actively engaged in selling the precious metal.
Analysts say that robust investments in gold set the stage for a rally in gold prices. In turn, high prices could reduce demand for gold in India where consumers cannot afford to buy the precious metal.
The yellow metal is currently trading at historic highs as the price has settled firmly above $2,000 per troy ounce. Investors shifted focus towards gold in March 2023 in the wake of the failure of large banks in the US and Europe. The World Gold Council has presented a bullish short-term outlook for gold. The WGC predicts that central banks will carry on with their gold purchases, albeit at lower rates than during the “yellow fever” last year.
It goes without saying that investments in bullion have always been viewed as the most reliable way of savings because gold is acknowledged to be a traditional safe-haven asset.
