The world is armed with gold. Record purchases of central banks

The world's central banks bought a record 400 tons gold in the third quarter of 2022 - this is the highest result since 1967! High inflation fueled gold sales – the demand for the metal increased globally quarter-on-quarter by 41%. The highest sales of gold were recorded in China, India, Japan and the Middle East. In our part of Europe, demand is still high.

The world is armed with gold

For the past three months, retail demand for gold bars and bullion coins has peaked  the world's highest level in six quarters. In the third quarter of this year sold  globally as much as 351 tons of gold, according to information provided by the World Gold Council (WGC). In our part of Europe, the demand for gold was over 86% higher than in the third quarter of 2021. In the opinion of the Management Board of the Treasury Mint, the increase in demand for gold on a global scale is primarily the result of rising inflation in many countries and reasonable investment management.

The World Gold Council (WGC) has published information on demand and gold prices on global markets in Q2022 351. According to data published by the organization, the global demand for physical investment gold in the form of bullion bars and coins was 2022 tonnes in the third quarter of 36 - an increase of XNUMX% year-on-year
and by 41% quarter on quarter.

In most markets, including Poland, demand was driven by a sharp rise in global inflation. In Europe, there were two factors behind the increased gold purchases: firstly, the ongoing war right on the EU border, and secondly, attempts to raise interest rates to curb inflation (while not plunging the region into a severe recession) encouraged further gold accumulation. Increased demand for physical investment gold is reflected in a consumer survey conducted by the WGC in September. 82% of American investors surveyed agreed that gold provides protection against inflation and currency fluctuations, and 85% of those surveyed indicated that it is a good hedge against periods of political and economic uncertainty. The fact that it is worth investing in gold in the long term is also evidenced by the reactions of investors from Japan. Currently, the country of the Rising Sun maintains a historically high gold exchange rate. Gold sales are slowing down there, especially among the older generation who have held gold for a long time - says Jarosław Żołędowski, president Of the Treasury Mint.

In the world's two largest markets, demand for bars and coins remained strong in the last quarter. In China, compared to the collapse caused by the COVID lockdown in Q70, demand almost doubled to 6 tonnes. In India, it increased by 45% y/y, and with a result of 14 tons it was 3% higher than the quarterly average for the last five years. In Japan, demand for physical investment gold remains high (56t in Q3) and is up 25% y/y. In the US, demand increased by 1999% y/y to 64 tonnes. U.S. mint coin sales are at their highest since 26 as consumers express increasing pessimism about the state of the U.S. economy. In an environment of rising inflation, investment demand was supported by gold's role as an inflation hedge. The Middle East also generated the highest level of quarterly investments in four years - here an increase of 47% y/y and a result of XNUMX tons was recorded. Demand for a safe haven of gold was particularly evident in Iran and Turkey, where record inflation coupled with stable lira prices resulted in a sharp increase in demand (at XNUMX t, it was the second highest quarter in the history of World Gold Council data).

The World Gold Council does not provide exact sales for Poland. However, our relations with the world's largest producers of this ore show that our country is in the TOP 5 in Europe when it comes to the level of revenues from this ore. It is also visible that more and more Polish companies, whether online or jewelry, are starting to sell gold investments. I advise my clients to buy products made of this metal from reliable dealers who are able to adjust the purchase to the buyer's capabilities. So it's worth taking a moment to check the seller, and it's not worth buying gold in a hurry, standing at the counter with other products - adds Jaroslaw Żołędowski.

Record demand for gold in Germany

European purchases of investment gold increased by 28% y/y and amounted to 72 tonnes. Demand in Germany (the largest European market) increased by 25% y/y, reaching a record level of 131t. On smaller European markets, classified in the WGC rankings as "other Europe" (including Poland), the demand for gold bars and coins increased year on year by as much as 86%. The quarterly result of 9,8t is the best since the fourth quarter of 2013.

In the third quarter of this year, there were also more countries that decided to increase their gold reserves. Fearing inflation - due to the need to maintain the value of foreign exchange reserves - the world's central banks intensively accumulated bullion. In the past quarter, banks purchased a record 400 tons of gold, which exceeded the expectations of observers and allows us to expect further increases. In total, this year the world's central banks have already accumulated 673 tons of bullion, which is the highest result since 1967! During the last quarter, banks from Turkey, Uzbekistan and Qatar bought the most gold, and the largest sellers of serum were countries such as: Kazakhstan (decreased its resources by 2t) and the United Arab Emirates (depleted the treasury by 1t of gold).

The price of gold (USD/oz) fell 8% in the third quarter, largely in reaction to the strength of the US dollar after the Fed raised interest rates to combat high inflation. In the Polish currency, however, there were clear increases. Prices ranged from PLN 7863-8379/oz, while in the corresponding period of 2021, it was in the range of PLN 6689-7095/oz. It is worth emphasizing here how much prices in Europe differ from quotations in US dollars - in y/y terms, in Q2022 3 the average quarterly price of an ounce of gold in USD fell by 13%, while at the same time quotations in EUR rose by XNUMX% %.