Global gold demand inches up in Q1'23

Global gold demand experienced a 13% decrease year-on-year, despite a recovery in the OTC market, which pushed total gold demand to 1.174 tons, a modest 1% increase compared to the first quarter of 2022. Joe Cavatoni, Regional CEO USA at the World Gold Council, provided insights into the various trends influencing gold demand in a recent interview on CNBC Africa. Cavatoni highlighted the complex dynamics shaping the gold market in the first quarter of 2023, emphasizing both positive and challenging aspects. Central banks exhibited robust buying activity, while the investment landscape saw some slowdown, particularly in ETFs. Additionally, retail and consumption trends varied across different regions, with pockets of strong buying in some areas offset by weakening demand in others. Central banks played a significant role in driving gold demand during the quarter. Cavatoni noted three key factors motivating central banks' purchases: diversification of reserve portfolios against inflation risks, seeking liquidity, and responding to the evolving investment landscape. The uncertain inflationary environment globally has also influenced gold demand, with rising interest rates in the US presenting a potential headwind. Looking ahead to the next quarter, Cavatoni outlined critical factors that will impact gold demand and prices. These include continued central bank buying, clarity in the rate environment to navigate inflation uncertainties, and the behavior of retail investors amid market developments. The potential for growth in retail demand, especially in response to banking crises, remains a crucial factor to monitor. Overall, the outlook for gold in the next quarter hinges on how these factors evolve and shape market dynamics. While uncertainties persist, Cavatoni remains cautiously optimistic about gold's performance in the upcoming quarter. The interplay of central bank activity, rate environment clarity, and retail investor behavior will be pivotal in determining gold's trajectory in the near future. As global economic conditions continue to fluctuate, gold is poised to witness both challenges and opportunities, making it a key asset to watch in the months ahead.