Global demand for gold among investors is growing this year thanks to turmoil in the banking sector, geopolitical tensions and a challenging economic environment, leading more people to flock to the precious metal as a safe-haven asset, says the World Gold Council (WGC).
The WGC's latest Gold Demand Trend report indicated demand for gold bars and coins grew 15% year-on-year to 1.9 tonnes in the first quarter of 2023 from 1.6 tonnes a year earlier, while local jewellery demand fell 6% during the period to 2.1 tonnes.
Overall consumer demand for gold in the country climbed 3% from the same period of 2022 to 3.9 tonnes, noted the report issued on Tuesday.
Rising gold prices and cost of living pressures were behind the 6% year-on-year decline in Thailand's jewellery demand in the first quarter, said Shaokai Fan, the council's head of Asia-Pacific (ex-China) and advisor to central banks.
Globally, central banks helped boost demand to a record high, adding 228 tonnes to their reserves.
"Sustained and significant purchases from the official sector underscore gold's role in international reserve portfolios during times of market volatility and heightened risk," he said.
"Investment demand faced a chequered landscape in the first quarter."
Mr Fan said renewed inflows into gold-backed exchange-traded funds (ETFs) in March, driven primarily by systemic risk in the US economy, partially countered outflows in January and February, bringing quarterly outflows down to a modest 29 tonnes.
On the other hand, bar and coin investment strengthened 5% year-on-year to 302 tonnes, he said.
Louise Street, WGC's senior markets analyst, said positive demand for gold ETFs continued in the second quarter.
"The looming threat of developed market recession may be the trigger for inflows to accelerate later in the year," she said.
Central bank buying is likely to remain strong and will be a cornerstone of demand throughout 2023, even if at lower levels than the record highs seen last year, said Ms Street.
In this landscape, it is likely that investment demand will grow this year, especially with waning headwinds from the strong US dollar and interest rate hikes, she said.
"As some economies teeter on the brink of recession, gold's role as a long-term strategic asset could take centre stage as it has a history of delivering positive returns in the last five out of seven recessions," said Ms Street.
