For the past three months, retail demand for gold bars and bullion coins reached its highest level in six quarters worldwide. Information released by the World Gold Council (WGC) shows that as much as 351 tons of gold were sold globally in Q3 2022. In our part of Europe, demand for gold was more than 86% higher than in Q3 2021. According to the management board of Mennica Skarbowa, the global increase in demand for gold is primarily the result of rising inflation in many countries and prudent investment management.
The World Gold Council (WGC) has released information on demand and prices for bullion on global markets in the third quarter of 2022. According to data released by the organization, global demand for physical investment gold in the form of bars and bullion coins amounted to 351 tons in the third quarter of 2022 – an increase of 36% year-on-year and 41% quarter-on-quarter.
In most markets, including Poland, demand was driven by a sharp rise in global inflation. In Europe, the factors for increased gold purchases have been twofold: firstly, the continuing war right on the EU border, and secondly, attempts to raise interest rates to curb inflation (while not plunging the region into a sharp recession), have encouraged further gold accumulation. The increased demand for physical investment gold is reflected in a consumer survey conducted by the WGC in September. 82% of U.S. investors surveyed agreed that gold provides protection against inflation and currency fluctuations, and 85% of respondents indicated that it is a good hedge for periods of political and economic uncertainty. The reaction of investors from Japan also proves that it is worth investing in gold for the long term. Currently, the “Land of the Rising Sun” is experiencing historically high gold prices. Bullion sales there are slowing down especially among the older generation who have kept gold for a long time – says Jarosław Żołędowski, President of the management board of Mennica Skarbowa.
In the world’s two largest markets, demand for bars and coins remained strong in the last quarter. In China – compared to the slump caused by the COVID blockade in Q2 – demand nearly doubled to 70 tons.
In India, demand rose 6% year-on-year, and with a result of 45 tons, it was 14% higher than the quarterly average of the past five years. In Japan, demand for physical investment gold remains strong (3 tons in Q3) and represents an increase of 56% y/y. In the US, demand rose 3% y/y to 25 tons. U.S. mint coin sales are at their highest since 1999, as consumers express increasing pessimism about the state of the U.S. economy. Amid rising inflation, investment demand was supported by gold’s role as a hedge against inflation. The Middle East also generated the highest level of quarterly investment in four years, with a 64% year-on-year increase and a result of 26 tons. Demand for the gold safe haven was particularly evident in Iran and Turkey, where record inflation coupled with stable lira prices brought a sharp rise in demand (at 47 tons, it was the second highest quarter ever in World Gold Council data).
The World Gold Council does not provide exact sales data for Poland. But from our relations with the world’s largest producers of this bullion, it appears that our country is in the TOP 5 in Europe when it comes to the level of revenue generated from gold sales. It is also noticeable that more and more Polish companies, whether online or jewelry, are starting to sell investment gold. Customers are advised to buy bullion products from reliable dealers who are able to match the purchase to the buyer’s capabilities. So it is worth spending some time to check the seller, and it is not worth buying gold in a hurry, with other products, standing at the counter. – adds Jarosław Żołędowski.
European purchases of investment gold rose 28% year-on-year to 72 tons. Demand in Germany (Europe’s largest market) rose 25% y/y, reaching a record 131 tons. In the smaller European markets, classified as “other Europe” in the WGC’s compilations (which includes Poland), demand for gold bars and coins rose year-on-year by as much as 86%. The quarterly result of 9.8 tons is the best since the fourth quarter of 2013.
The third quarter of this year has also witnessed the arrival of countries that decided to increase their gold reserves. Fearing inflation – out of a need to maintain the value of foreign currency reserves – the world’s central banks have been stockpiling bullion heavily. In the past quarter, banks purchased a record 400 tons of gold, which exceeded observers’ expectations and allows for further increases to be expected. In total, the world’s central banks have already accumulated 673 tons of bullion this year, which is the highest score since 1967! Over the past quarter, banks from Turkey, Uzbekistan and Qatar purchased the largest amount of gold, while the greatest sellers of the product were countries such as Kazakhstan (reduced its reserves by 2 tons) and the United Arab Emirates (depleted its treasury by 1 ton of gold).
The price of gold (USD/oz) fell 8% in the third quarter, largely in response to the strength of the U.S. dollar after the Fed raised interest rates to combat high inflation. The Polish currency, on the othear hand, saw sharp rises. Prices fluctuated between PLN 7863-8379/oz, compared to a range of PLN 6689-7095/oz in the same period of 2021. It is also worth noting how sharply European prices diverge from US dollar quotations – on a y/y basis, in Q3 2022 the average quarterly price of an ounce of gold in USD fell by 3%, while at the same time quotations in EUR rose by 13%.