A flurry of bullion buying activity by global central banks and resilience in demand for jewellery amid elevated prices for the precious metal boosted the gold industry in the third quarter 2023, the World Gold Council said in a report released yesterday.
South Africa has an influential role in the global gold industry despite accounting for a meagre 4% of worldwide bullion output at 110 tons in 2022. This month, the World Gold Council appointed Neal Froneman, the CEO for Sibanye-Stillwater, as its new chairperson while Niël Pretorius, the CEO at DRDGold, was appointed as a new director.
In the 2023 third quarter to end September, gold buying from central banks provided some impetus for gold. This suggests that “increasing gold allocations are becoming an accepted prudential strategy” across the central bank buying segment.
“With central bank demand resuming its voracious pace after a slower Q2, we expect the annual total to approach last year’s record, and there’s an outside possibility it will exceed that figure,” the WGIC said in its latest quarterly report.
Central bank gold buying is up 14% in the 2023 year to date compared to 2022. So far in 2023, central banks have been net buyers of about 800 tons of gold, the highest gross for the nine-month period.
China and Poland were among the biggest buyers of gold during the third quarter period.
In Africa, Tanzania has just announced a gold buying exercise as a way of boosting its foreign currency reserves, it said last month. The East African country planned to buy as much as six tons of gold by the end of this year.
Demand for jewellery made of gold also remained resilient during the quarter, although it had marginally softened by 2% on a year-on-year basis to 516 tons. This was despite elevated gold prices on global markets.
The 2% year-on-year decline has been attributed to “cost of living pressures on consumers in many markets around the world”. According to Statista, jewellery accounts for just about half of gold demand in South Africa.
On a global scale, total gold supply rose 6% year-on-year during the quarter under review, with mine production reaching a year-to-date record of 2744 tons. This was driven by growth in mine production and recycling.
Mine production of gold during the period touched record highs of 971 tons, while recycled gold output amounted to 289 tons. All in all, elevated mine production and recycling contributed to a total year-to-date supply of 3 692 tons.
Ongoing ramp-up at Bibiani in Ghana, together with higher grade ore availability at Ahafo, lifted output by 7%. In Canada, mine production increased by 14%, with output boosted by “a ramp-up to full production at Eléonore after its temporary June closure due to wildfires in Quebec, and by higher forecast grades” at Musselwhite.
Gold ETFs in Asia and Africa registered 1.5 tons of outflows in Q3 at about $70 million.
“Between January and September, the region’s outflows amounted to $140 million or 2.8 tons, mainly driven by Australia and South Africa,” said the report.
Investment into gold bars and coins in the 2023 third quarter declined 14% to 296 tons, weighed down by weaker markets in Europe.