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Vietnamese gold demand decreased sharply in the first quarter of 2023

Demand for gold has decreased by 12%

In Vietnam, from 19.6 tons in the first quarter of 2022, the demand for gold has decreased by 12% to only 17.2 tons. Similarly, the need for bullion and gold coins also experienced a decline, from 14 tons in the first quarter of 2022 to 10%, to 12.6 tons in the first quarter of 2023. Meanwhile, jewelry demand decreased by 18% over the same period in 2022, from 5.6 tons in the first quarter of 2022 to 4.6 tons in the first quarter of 2023.
Also read: Vietnam is region's largest gold market: WGC » Breaking News, Latest World News Updates - VietReader Viet Nam
According to Tuoi Tre newspaper, Mr. Shaokai Fan, Managing Director of the Asia-Pacific region (excluding China) and Global Director of Central Banks of the World Gold Council (WGC), has provided several explanations for the above phenomenon. The decline in gold jewelry demand is partly due to the impact of solid base effects. The first quarter of 2022 has the most substantial domestic demand for gold jewelry since 2007. Gold jewelry purchases in the first quarter of 2023 recorded positive signs during the Lunar New Year before gradually decreasing in February and March due to the increase in gold prices.
With gold prices nearing a quarterly average of $1,890 per tael, gold's complicated performance in Q1 demonstrates gold demand's diversity and global nature.
Central banks stimulated demand by adding 228 tons to global reserves, reaching a record level in the first quarter of statistical data. The continuous purchase of gold in large quantities from government agencies emphasized strengthening the role of gold in the foreign exchange reserve portfolio during times of market volatility and high risk.
Meanwhile, the global gold jewelry volume in the first quarter remained stable at 478 tons. China's gold jewelry demand has gradually recovered, reaching 198 tons in the first quarter of 2023, in which consumer shopping activities were not restricted because of the easing blockade. This partially offset the decline in demand in India, where consumption fell 17% year-on-year to just 78 tons in the first quarter of 2023. The main factor driving the decline. The above is the sharp increase in the domestic gold price.
Investment demand for gold in the first quarter of the year experienced a transformation. Although there was a phenomenon of capital withdrawal from the gold ETF in January and February due to systematic risks of the US economy, March recorded a recovery of investment capital in gold ETFs, since then contributed to reducing the withdrawal of the whole quarter to only a modest level, about 29 tons.
However, global investment demand for bullion and gold coins grew 5% year-on-year to 302 tonnes, despite significant volatility in key markets. Demand for bullion and gold coins in the US hit 32 tons in the first quarter, the highest level since 2010, mainly due to fears of a recession and the need to seek refuge in the banking crisis. The US increase balances out the demand decline in Europe, particularly Germany, where investment demand fell by 73%. The significant decrease in orders in Germany was mainly due to favorable accurate interest rates and rising gold prices in the European market, encouraging selling for profit.

Record a slight increase in the total gold supply

The first quarter saw a slight increase in total gold supply, reaching 1,174 tonnes, with a 2% increase in mining and 5% in recycling, boosted by rising gold prices.
Ms. Louise Street, the senior market research expert at the World Gold Council, commented that the complicated movements of the gold market in the first quarter highlighted the diversity in gold demand and reinforced the role of gold as well. as the global performance of this asset class. Against various economic and demand drivers in the world gold market, growth in some regions has offset declines in others. Common in primary markets is the interest of investors in gold to protect asset value in times of financial turmoil.
Gold's role as a safe-haven asset has become more critical against ongoing banking industry uncertainty, geopolitical tensions, and economic hardship. According to a source from the Hanoi Moi newspaper, the demand for investment in gold through ETFs will continue to be stable in the second quarter of this year. The risk of recession in developed markets will be the driving force for investment in gold to increase at the end of the year, significantly when the barrier from USD and interest rate increase gradually decreases. Central banks will likely continue to buy aggressively and become one of the main drivers of gold demand in 2023. However, the level of buying is likely to be lower than the record levels achieved in the previous year.
According to Louise Street, when some economies are on the brink of recession, the role of gold as a strategic, long-term asset can become essential because this asset channel has proven to deliver positive returns in five of the last seven recessions.
Also read: Gold of high interest for Vietnamese investors to combat inflation » Breaking News, Latest World News Updates - VietReader Viet Nam 

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