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How Gold’s Demand Rose to an 11-Year High in 2023

Benefits of investing in precious metal

When most asset classes are observing extreme volatility and investors all around the world are worried about suffering from massive losses, people who invested in gold are pretty much in a good spot. Gold prices have witnessed an exceptional rally in March, and the future looks bright for gold (and people who’ve invested in it!).

People are trying to understand what caused such a surge in gold prices and what resulted in the demand for gold rising to an 11-year high.

Rising Demand for Gold

According to World Gold Central, the demand for gold soared and reached an 11-year high due in 2022 to extensive buying by retail investors and colossal central bank purchases. The annual demand for gold surged to 4,741 tons, which marks an 18% increase. This figure doesn’t include OTC trading. This is the largest figure since 2011.

What Caused the Surge in Gold Demand?

The surge in gold demand is due to numerous factors.

Bulk Gold Buying by the Central Bank

The primary factor that caused an increase in gold demand was the impulsive gold buying by the Central Bank. The Central Bank bought 1,136 tons of gold across the year, worth $70 billion, 152% more than in 2021. The Central Bank purchased 417 tons of gold in Q4 2022 alone.

Aggressive Gold Buying by Investors

Another factor that added to the increase in gold demand in 2023 is aggressive retail investor buying. The demand for gold by investors increases to 1,107 tons, which marks a 10% increase. Gold jewelry consumption dropped by 3%, showing that it’s not the consumers buying gold but the investors who want to park their money in a safe spot.

Increase in Gold Supply Following Rise in Demand

Following the unprecedented increase in gold demand, the total annual gold supply was increased by 2% (4,755 tons) to meet the ever-increasing demand for gold. Gold mine production also touched a 4-year high of 3,612 tons.

Why Is Gold Such a Popular and In-Demand Asset Today?

Gold has always been in high demand, but it’s only now that the demand has surpassed all records.

High Value in Store

Considering the volatility and uncertainty around other asset classes, gold retains its value well. For this reason, the money that one invests in gold is safeguarded better than the money put into other assets like bonds and stocks, where the probability of loss is much higher. When you own gold, you’re actually storing high value. Your investment money doesn’t get devalued. This is one of the many benefits of investing in precious metals.

High Liquidity

Another reason why gold demand is ever-increasing today is its high liquidity. You can sell gold at any time in exchange for cash. When you sell gold, the cash you retrieve is higher than what you invested initially because an increase in gold prices is usually consistent.

Hedge Against Inflation

One of the biggest reasons why gold demand is increasing today is the fact that it offers an excellent hedge against inflation. When the money is getting devalued, secure private vault storage rentals from devaluation and offers a safe haven.

Final Word

The demand for gold has touched an 11-year high which isn’t for nothing. Get in touch with our experts at Orion Metal Exchange and discuss if it’s the right time to invest in gold to make money. We aim to safeguard your money and secure your future.

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