Gold demand globally (excluding OTC) dropped by 2% year-on-year (y/y) to 921t during Q2, although total demand (inclusive of OTC) was up 7% y/y, pointing to a solid gold market globally.
In Thailand, consumer gold demand fell by 10% y/y to 7.6t, from 8.5t in Q2 2022. The decline was a result of jewellery demand dropping by 10% y/y to 1.7t, from 1.9t in Q2 2022 and total bar and coin demand falling by 10% y/y to 5.9t, from 6.6t in Q2 2022.
Shaokai Fan, Head of Asia-Pacific (ex-China) & Global Head of Central Banks at the World Gold Council, said: "High gold prices, uneven economic recovery and political uncertainty in Thailand were behind the 10% y/y drop in Q2. Gold jewellery demand declined to less than 2t as consumers were encouraged to sell back old gold jewellery rather than buy new."
Across the world, second quarter central bank demand was down y/y to 103t, primarily driven by net sales in Turkey to meet strong local gold demand. However, central banks bought a first half record amount of 387t, and quarterly demand is in line with the longer-term positive trend - indicating that official sector buying should remain strong throughout the year.
Turning to gold investment, global bar and coin demand increased by 6% y/y to 277t in Q2, and a total of 582t in H1, thanks to growth in key markets including the US and Turkey. Gold ETFs outflows of 21t in Q2 were notably smaller than the 47t in the same quarter of 2022, bringing net outflows to 50t in the first half of the year.
Jewellery consumption remained resilient in the face of high prices, showing a 3% y/y increase in Q2 and an H1 total of 951t. A rebound in Chinese demand and remarkably strong consumer buying in Turkey bolstered second quarter consumption.
Finally, total gold supply globally was 7% higher y/y at 1,255t in Q2, with mine production estimated to have reached a record for H1 of 1,781t.
Louise Street, Senior Markets Analyst at the World Gold Council, commented:
"Record central bank demand has dominated the gold market over the last year and, despite a slower pace in Q2, this trend underscores gold's importance as a safe haven asset amid ongoing geopolitical tensions and challenging economic conditions around the world."
"Looking ahead to the second half of 2023, an economic contraction could bring additional upside for gold, further reinforcing its safe-haven asset status. In this scenario, gold would be supported by demand from investors and central banks, helping to offset any weakness in jewellery and technology demand triggered by a squeeze on consumer spending."
Source: Spark Communications