Prized by central banks, gold in record demand since 2011

Demand at its highest since 2011, record purchases by central banks in 55 years… During a year shaken by the war in Ukraine, gold took advantage of its status as a safe haven in times of crisis.

For the year 2022, global gold demand stood at 4,740.7 tons, a jump of 18% compared to the year 2021 and its highest level for more than a decade according to the report World Gold Council (CMO) quarterly published on Tuesday.

But gold hasn’t fully erased the effects of the Covid-19 pandemic, especially for bullion, coin and jewelry investments.

“The big surprise of the year was the record demand from central banks, which reached its highest level in 55 years,” Louise Street, an analyst at the organization, told AFP.

These institutions indeed rushed for gold last year, their purchases having more than doubled over one year to 1135.7 tons.

Central banks use it “as a long-term store of value” alongside their currency reserves, says Ms. Street: “Gold does well in times of crisis”.

These factors were important demand drivers in 2022, a year marked by the war in Ukraine, particularly strong concerns around the global economy in the wake of the COVID-19 pandemic, and record inflation levels. in many countries.

On the price side, gold prices rose only 1.25% over the year, but the precious metal experienced a colossal jump in March, at the start of the Russian invasion of Ukraine, illustrating the safe haven quality of the precious metal.

It pushed up to 2070.44 dollars an ounce, a few dollars from the historic record of 2020, before falling back over the rest of the year, in particular in the face of competition from the other queen safe haven, the dollar, which has strengthened over the past year.

The pandemic is still being felt

However, the effects of the Covid-19 pandemic were still strongly felt on gold demand in 2022, particularly in terms of investments in bars and coins, but also in jewelry in China.

In total, investment in bars and coins totaled 1,217.1 tonnes in 2022, compared to 1,190.9 in 2021, managing to hold up thanks to demand from other countries.

The markets of India and China are crucial for the demand for gold bars and coins, but especially for jewellery.

Traditionally, families take advantage of weddings and other celebrations to save part of their savings by changing them into bars, necklaces, rings, bracelets and other gold objects, a traditional safe haven.

But until December, China applied a very strict “zero-COVID” health policy which notably imposed generalized screening tests, strict monitoring of movements, but also mandatory confinements and quarantines as soon as cases were discovered.

After the policy was scrapped, demand was hit “by the massive spike in Coronavirus infections that hit consumers at the end of the year,” Louise Street recalls, with China currently facing its strongest epidemic wave for three years.

Result: Chinese jewelry demand fell by 15% compared to 2021, and investments in bars and coins by 24%.

“What’s encouraging is how the rest of the world has picked up the slack,” says Ms. Street. Globally, jewelry demand fell only 2% to 2,189.8 tons.

The tech sector also continued to feel the indirect effects of the COVID-19 pandemic in 2022, including continued supply chain disruptions and the global economic slowdown that weighed on consumption.

The yellow metal is found in the components of many electronic devices such as computers or mobile phones, and purchases in the sector fell by 7% in 2022 over one year, to 308.5 tonnes.

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