Central Banks' Buying Binge Boosted 2022 Global Gold Demand to 11-Year High

Global gold demand, fed by the largest central bank purchases in more than a half-century, surged to the highest level since 2011 last year despite reduced consumption by the metal's largest buying segment: jewelers.

The London-based World Gold Council reported that gold demand in 2022 increased 18% to 4,741 metric tons. The world's central banks accounted for about a quarter of that amount, 1,136 metric tons, 152% more than 450 million metric tons in 2021.

The buying binge from central banks reflected their desire to increase exposure to an asset historically viewed as a consistent store of value and a hedge against inflation and financial market turbulence. Global inflation surged last year, with U.S. inflation hitting 40-year highs, causing central banks around the world to raise interest rates.

That demand helped push global gold prices to a slight gain for 2022. Spot prices closed the year at $1,814 per troy ounce, up 0.4%. They surged 11% in the final two months of the year after falling about 20% between early March and late October. Year-to-date, the metal has advanced 6%, closing Wednesday at $1,923.90 per troy ounce.

In addition to central banks, retail investors helped push overall investment demand up 10% to 1,107 metric tons last year, despite a reduction of holdings by exchange-traded funds (ETFs).

Retail investors bought 1,217 metric tons of gold bars and coins, up 2% from the previous year, while ETFs sold 110 metric tons, down sales of 189 metric tons from the prior year. The council's annual figures exclude transactions in over-the-counter financial markets.

The council said Europe, Turkey and the Middle East all exhibited strong demand from retail investors, helping offset weaker demand in China because of Covid-19 shutdowns.

The jewelry fabrication industry remained the world's biggest buyer of gold last year, accounting for 46% of all purchases. But the industry's demand declined 3% from the prior year to 2,190 metric tons, even as demand from India, the world's largest gold jewelry market, remained strong after a substantial 2021 pandemic rebound.

Meanwhile, purchases from the technology sector for consumer electronic uses fell 7% to 309 metric tons amid deteriorating economic conditions, the council said.

Annual global gold supplies in 2022 increased to 4,755 metric tons, aided by mining production of 3,612 metric tons, the most in four years.