Gold’s supply and demand in Q2 2022

Gold's supply and demand

In the first part of our Q2 Gold Report, we highlighted the impact of the Fed’s tightening policy and particularly how the market’s expectations of further rate hikes weighed on the gold price. Gold fell 6.7% in the second quarter, negating the precious metal’s strong gains in Q1 20221. We also reported on other significant macro factors and compared gold’s performance to other asset classes. In this second part of the Gold Report, we explore the various sources of supply and demand to further explain recent movements in the gold price.

Sources of gold demand in Q2

Source: World Gold Council, showing gold demand per market segment in Q2 2022.

Gold demand fell 24% in Q2. Total demand of 948.4 tonnes was 8% lower than over the same period last year. Demand was weaker across almost all categories with demand relating to investment seeing the greatest falls. Bar and coin demand fell 13% on the quarter and ETFs recorded net redemptions. Jewellery continues to be the biggest source of demand although quarter-on-quarter demand dropped. Technology demand fell 3% on the quarter as activity was lower and compounded by extended supply chain disruption in China. There was a positive uptick in demand from central banks, with twice as much purchased in Q2 than in the first quarter.

Gold demand from the jewellery sector

Source: World Gold Council, as at 30 June 2022.

Jewellery demand was down 6% on the quarter, but up 6% compared to Q2 last year, with 484.3 tonnes purchased. Fabrication outpaced the 453.2 tonnes of gold consumed, as was also the case in Q1, meaning the inventory of gold jewellery increased by just over 31 tonnes in Q2. Compared to the second quarter of 2021, jewellery demand was up 6%.  

Although demand for the quarter remained behind its five-year average, it was higher than what would have been anticipated given the relatively high price level of the metal. The lower jewellery demand is largely explained by constrained Chinese purchases due to the lockdowns in some cities with a quarter-on-quarter fall of 73.8 tonnes. This was offset by an increase in demand in the Middle East, fuelled by the effect of higher oil prices, and 46.1 tonnes increase in Indian demand driven by wedding- and festival-related purchases.

Net purchasing of gold by central banks

Source: World Gold Council, as at 30 June 2022.

Central bank demand was 179.9 tonnes in Q2, double the 89.7 tonnes purchased in Q1 although 14% lower than in Q2 last year. Turkey was again a major purchaser, and the Central Bank of Iraq made its first major purchase since September 2018 with 34.0 tonnes. Although Russia said in the previous quarter it would be restarting its purchasing programme, actual data on Russian reserves has not been available since January 2022. The new governor of the Czech central bank has made a commitment to significantly increase its gold reserves, something to watch over the coming months, although he suggested it would be gradual “over a number of years”.

Demand for gold via ETFs

Source: Bloomberg, as at 30 June 2022.

Known holdings of gold-backed ETFs and other exchange-traded products fell 1.3% in the quarter, coinciding with a decrease of 6.7% in the gold price over the same period. The flow of gold in and out of ETFs in the quarter was estimated to have fallen by a net 38.8 tonnes, following the 272.7 tonnes of inflow in Q1 when the gold price neared its all-time high.

Monthly flows into gold ETFs per region

Sources: Bloomberg and World Gold Council, as at 30 June 2022.

The regional chart shows the outflows came in the last two months of the quarter and were more keenly felt in North America. At the same time, European gold products recorded 4.5 tonnes of net inflows and Asian products saw small net outflows (-1.2 tonnes). Year-to-date, flows into gold exchange-traded products remain comfortably in net positive territory. 

Supply of gold

Source: World Gold Council, as at 30 June 2022.

Gold supply in Q2 was 28.9 tonnes higher than in the previous quarter, a 2.5% increase. This was primarily due to the amount of mined supply, which increased 6.9% in the quarter. Mined supply has overcome pandemic-related problems but now faces the general global issue of higher energy costs, which may impact extraction decisions. Recycled gold supply was 3.3% lower in Q2 compared to the previous quarter. Given the relatively high price of gold and the squeeze on living standards, the supply of recycled gold may have been anticipated higher but limited access to markets in China has constrained supply. Hedging activity took 10.0 tonnes out of available supply.


  • 1Bloomberg, LBMA Gold Price, in USD, Q2 performance for the three months to 30 June 2022. Q1 2022 performance was 5.9%. Past performance is not a reliable indicator of future returns. 

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