Global Gold Demand Hits Record $193 Billion Amid Rising Geopolitical Tensions

Key regional and sectoral data:

1. China and other markets: Demand for bars and coins in China increased 67 percent year-on-year to a record 207 tons. Strong growth in gold purchases was also observed in India, South Korea, and Japan, as well as the US (14%) and Europe (50%).
2. Impact on the Jewelry Market: Under pressure from high prices, total gold jewelry demand fell 23 percent year-on-year to 300 tons. During this period, the decline was 32 percent in China, 23 percent in the Middle East, and 19 percent in India.
3. Value Increase: Even though the volume of jewelry sales went down, the value of jewelry sales went up, showing that people are willing to pay high prices for gold. Sachin Jain said that in markets like China and India, some jewelry consumption has now shifted to demand for bars and coins, which are seen as an alternative investment.
   

Central banks also supported demand by adding 244 tons of gold to their global reserves in the January-March quarter. The Reserve Bank of India (RBI) also made fresh purchases of 300 kilograms of gold during the quarter. There was also some selling by the central banks of Turkey, Russia, and Azerbaijan. Physically backed gold ETF holdings also increased by 62 tonnes, with Asian funds contributing the majority (84 tonnes), while US funds saw outflows in March. On the supply front, mine production remained at record levels, and recycling increased by 5 percent, leading to a 2 percent increase in total global supply to 1,231 tonnes.

According to Lewis Street, investment demand is expected to remain strong, particularly in Asia, due to geopolitical risks. However, prolonged high interest rates in Western countries could pose some challenges to the market. On the supply side, mine production is expected to increase modestly, but a potential energy crisis could impact this outlook.