Investors in Germany bought significantly less gold last year due to rising interest rates.
In 2023 as a whole, net purchases of gold bars and gold coins in Germany collapsed compared to the previous year, according to the report on gold demand published by the World Gold Council (WGC) industry association on Wednesday. Demand therefore fell from 185 tons in 2022 to 47 tons. “High inflation, the weak economy and high interest rates have weighed on demand for gold bars and gold coins,” WGC market strategist John Reade told the financial news agency dpa-AFX.
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According to Reade, Germans’ attitude towards gold investments has not changed in general, but economic concerns are likely to slow gold demand “in the current year, and perhaps beyond.” In addition, the price of gold is currently too high for many buyers in Germany, said Reade, and there has been increased profit-taking in the past year. The industry association also recorded an above-average decline in demand in the neighboring countries of Switzerland and Austria.
At the end of 2023, gold was more expensive than ever before. In December, the price of a troy ounce on the London Stock Exchange temporarily rose to a record high of $2,135. The report further shows that overall demand – which consists of demand from the jewelry industry, the investment sector and gold purchases by central banks – fell by five percent year-on-year to 4,448 tonnes. However, if over-the-counter trading is taken into account, gold demand rose to a record high in 2023, according to the industry association. In this regard, the WGC reported a maximum value of 4,899 tons.
The WGC recorded a sharp increase in gold purchases in China. After the strict Corona measures ended at the beginning of 2023, demand from Chinese buyers of gold coins and bars increased by 28 percent to 280 tons. “The real estate crisis in China and a weak Chinese currency supported Chinese retail investors’ demand for gold investments,” said Reade.
In the past year, central banks also appeared on the market as important gold buyers. The industry association put global demand from central banks at 1,037 tonnes in 2023. This is the second highest after central bank demand hit a record 1,082 tonnes in 2022.
In contrast, there was no major change in gold mine production last year. The industry association reported a slight increase of one percent. The recycling of used gold was significantly higher. The WGC reported an increase of nine percent in the recycling of precious metals.
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LONDON/FRANKFURT (dpa-AFX)