WGC - Gold Demand Trends Q1 2023

The report highlights that mine production and recycling have shown slight upside, primarily due to project expansion in North America, reduced seasonal variation in China, and the end of strikes in South Africa. However, recycling levels remain relatively low despite record prices. Central banks have continued to surprise with their net buying rate, indicating a positive trend. The Q1 net buying rate sets the tone for a higher midpoint estimate for the full year. Western markets, particularly the US and Europe, have shown signs of depletion of near-market stocks. Southern European consumers still hold a considerable amount of 18-carat gold jewelry. This suggests a potential impact on supply and demand dynamics. Ongoing political and economic turmoil in the Middle East has dampened gold sales. Gold is seen as a safe asset in the face of high inflation, weak currencies, and geopolitical risks. Chinese recycling volumes were lower quarter-on-quarter due to the surge of retailer supply at the end of the calendar year. Excluding China from the global total would have resulted in a significant increase in recycling volumes. India saw higher quarter-on-quarter and year-on-year recycling volumes, driven by price sensitivity in the market. Finance companies also liquidated gold holdings, potentially due to defaulted loans and opportunistic sales. Investment is expected to dominate the gold market in 2023, with robust central bank buying and modest growth in mine production and recycling. Overall, the report suggests that the gold market is likely to remain stable in the near future, with investment being the primary driver of demand. However, geopolitical risks and economic uncertainties could impact the market dynamics, and it will be interesting to see how the market responds to these challenges in the coming months.