World Gold Council - 3. Quarter General Summary

In the third quarter, despite a 6% weaker demand for gold compared to the same period last year, it continued to remain strong, surpassing its five-year average by 8%. Central banks continued to buy gold at a historic pace, resulting in the third strongest quarter with a net purchase of 337 tons. However, this figure fell short of the extraordinary record in the third quarter of 2022.

Jewelry demand softened slightly due to high gold prices, while an air of uncertainty prevailed in the investment environment. Investment demand in the third quarter increased by 56% on an annual basis, reaching 157 tons, but remained weak compared to the five-year average.

There was a decrease observed in global gold ETFs compared to the previous year. Investment in gold bars and coins decreased significantly, largely influenced by a sharp decline in demand in Europe. Over-the-counter (OTC) investments reached 120 tons.

Despite the outflows from ETFs, OTC investments supported the gold price. Jewelry consumption decreased by 2% annually, and the use of gold in technology decreased by 3% due to fragility in consumer electronics demand.

Mine production reached a record level in the third quarter, reaching 971 tons, contributing to a 6% annual increase in total gold supply to 1,267 tons. Recycling (jewelry and electronic scrap, etc.) also increased by 8% to 289 tons.

In the last quarter, central banks continued strong net gold purchases, and demand for bars and coins also increased. Despite rising bond yields and a strong U.S. dollar, gold prices maintained their strength. The hesitations of ETF investors and speculative buyers present a growing opportunity for price strengthening in the fourth quarter. This optimism is fueled by a fundamentally strong position for gold and perceived decline in sensitivity.

General Expectations:

In the last quarter, central banks continued strong net gold purchases, and demand for bars and coins increased globally. Despite rising bond yields and a strong U.S. dollar, gold prices have maintained their strength, currently staying around the high levels of 2000 ounces.

- Total investment in gold, including OTC, is expected to increase compared to the previous year.

- Central bank demand is expected to be close to last year's level, but the likelihood of exceeding the total figure for 2022 is very low.

- Manufacturing demand is expected to be lower than forecasted, showing an annual decline.

Investment Outlook Summary:

The anticipated increased flow to gold ETFs and speculative futures by the World Gold Council in 2023 did not materialize. On the contrary, the unexpectedly strong demand for bars and coins has sustained gold demand. The fundamental support for gold, reflecting geopolitical tensions and sensitivity reflected in COMEX futures, continues, creating an opportunity for net inflows in the fourth quarter.

China and India's demand for bars and coins continues, with a safe-haven demand in China and wealth-focused purchases in economically strong India. Demand is slowly recovering in Europe, but the interest seen in the early fourth quarter in the U.S. could indicate potential improvement for Europe in the coming quarters. The outlook remains cautious, but upward expectations are maintained.

The third-quarter OTC demand, balancing weaknesses in demand with purchases and inventory increases by "high net worth" individuals in Turkey, presents a mixed picture for gold demand. Nevertheless, live prices align the fourth-quarter forecast with the third quarter, maintaining overall strong investment figures for 2023. In summary, investments, including OTC, continue to progress positively. In the fourth quarter, possible small entries into ETFs, supported by increasing speculative interest in futures, coexist with strong demand for bars and coins.

Production Expectation Summary:

After the record-breaking third quarter, a new record in annual mine production is expected. Despite increasing production costs, total production of existing mines in America is expected to increase. Although third-quarter recycling figures were slightly lower than expected, overall predictions for the year have largely remained unchanged. As the year-end approaches, strong overall figures, high local gold prices, and a deteriorating global economic outlook significantly contribute to a more robust recycling outlook.