Stronger gold demand in Q3 of 2022!

Stronger gold demand in Q3 of 2022!
A stronger Q3 through stronger consumer and central bank buying, helped current year demand recover to pre-COVID norms. Gold demand (excluding OTC) in Q3 was 28% higher y-o-y at 1,181t. Current year demand increased 18% vs the same period in 2021, returning to pre-pandemic levels.

Jewellery consumption reached a robust 523t, increasing 10% y-o-y despite the deteriorating global economic backdrop. Current demand is slightly firmer (+2%) at 1,454t. Investment demand (excluding OTC) for Q3 was 47% lower y-o-y at 124t, reflecting weak sentiment among some inves-tor segments. 36% growth in bar and coin investment (to 351t) was insufficient to offset 227t of ETF outflows. OTC demand contracted significantly during the quarter, echoing weak investor sen-timent in ETFs and futures markets.

Central banks continued to accumulate gold, with purchases estimated at a quarterly record of nearly 400t. An 8% y-o-y fall in technology demand reflected a fall in consumer demand for elec-tronics due to the global economic downturn. Total gold supply increased marginally (+1% y-o-y) to 1,215t. A sixth consecutive quarter of y-o-y growth in mine production was partly offset by lower levels of recycling.

The LBMA gold price PM (US$/oz) fell by 8% during the third quarter. The decline was largely a re-sponse to US dollar strength as the Fed hiked interest rates to combat high inflation. However, the average gold price in Q3 was only 3% lower y-o-y, more closely aligning with the relative perfor-mance of demand (OTC inclusive) and supply during the quarter.

Investment demand diverged on differing priorities. Retail investors bought gold as a store of value amid surging global inflation, while ETF investors reduced their holdings in the face of rising global interest rates.

India generated much of the global recovery in jewellery.
Urban consumers were the engine of Indian demand in Q3, encouraged by a return to pre-COVID levels of economic activity. Rural con-sumers were more cautious as their inflation outpaced that of their urban counterparts.

Chinese retail demand firmed as lockdown restrictions eased. Jewellery consumers benefited from a pullback in the gold price as lockdown restrictions eased in key cities. And retail investors were encouraged by gold’s safe-haven appeal amid a depreciating local currency and falling local equity prices.