Gold: Central Bank set a slabThe WGC published (https://www.gold.org/goldhub/research/gold-demand-trends/gold-demand-trends-full-year-2023) its estimates of gold demand in 2023.

Gold: Central Bank set a slab

The WGC published (https://www.gold.org/goldhub/research/gold-demand-trends/gold-demand-trends-full-year-2023) its estimates of gold demand in 2023, although amid high investment rates demand through ETFs was rather negative - this did not prevent demand from growing by 3% and the price by +15%. Although gold would have declined at these rates in the past, there are new factors.

The growth trigger for the gold market was demand from central banks, which for the second year have been buying more than 1,000 tons per year, and even local sales in Turkey have not changed the picture much: 1,037 tons for 2023.

Moreover, for the central banks themselves, this is generally quite modest ~$65 billion per year (with foreign exchange reserves of almost $12 trillion). The same NBK buys almost non-stop ~60 tons per quarter and in 2023 bought 225 tons. Here the question is rather not even in volumes, but in the synchronicity and rhythm of purchases - every quarter. This forms price support - Central Banks are slowly and systematically buying, which, even with high interest rates, did not allow gold to fall. In 2023, demand increased in the over-the-counter (OTC) market, where big money quietly buys large volumes without unnecessary regulation (~450 tons in 2023 - an increase of more than 8 times).

Considering that 2024 is a year of great risks: geopolitical, economic (stagnation/recession), financial stability risks (debt, liquidity, rates), etc., in general, demand promises to be sustainably high. While positive real rates are limiting gold's gains, central bank purchases and a wide range of risks are likely to continue to provide strong support for gold prices.

06.02.2023