Thailand third highest buyer of gold in Southeast Asia in 2022
Demand for gold in Thailand was the third highest in Southeast Asia in 2022 as the precious metal remains popular for hedging against inflation and global uncertainties, the World Gold Council (WGC) said on Thursday.
Andrew Naylor, WGC regional CEO for Asia Pacific excluding China, told an online media briefing that demand for gold in Asean was in line with global trends.
However, while global gold demand is primarily driven by central bank purchases, demand in Asean is primarily driven by individuals who buy gold to increase their personal wealth or speculate for profit.
Asean gold buyers have also been encouraged by China's reopening, which has rapidly restored the region's business activity to pre-Covid-19 levels.
According to the Gold Demand Trend 2022 report, Vietnam was the biggest buyer of gold in Asean, with 69.1 tonnes, followed by Indonesia (50 tonnes), and Thailand (37.9 tonnes).
Naylor said that Vietnam's gold demand was up 37% over last year, due to their strong recovery. Vietnamese craving for gold bars and coins accounted for around 41 tonnes of the country’s total gold demand. Indonesia saw similar trends, the council said.
Thailand, on the other hand, in 2022 witnessed only a modest increase in gold demand of 3% year on year.
The higher gold demand in Thailand was supported by a 15% year-on-year increase in jewellery demand, followed by an 8% year-on-year increase in bar and coin demand.
Overall demand for gold in Asean and around the world remains strong. High inflation, central bank policies, global economic uncertainties, and geopolitical tensions have driven investors to seek safe haven assets to protect their portfolios, Naylor stated.
However, as long as inflation remains high, gold demand from retail buyers will soften. Institutional investment will be the primary factor for gold's rise in terms of demand and returns, he said.
He believes the trend should alert retail investors to be cautious.
"Institutions view gold as an effective hedge against inflation, but they also have access to other cutting-edge tools that individuals do not. Individuals have no other option to protect themselves against inflation than to invest in gold," he noted.
However, institutional investor demand is likely to drive up gold price, making it prohibitively expensive for individuals to use gold for hedging.
Naylor believes that gold will continue to see at least modest demand this year.
Gold usually falls in value when interest rates are rising and the dollar is strong. However, given the current uncertainties and high inflation, most investors would see gold as a non-interest-bearing asset worth holding.
According to the WGC study, annual returns from investment in gold during periods of high inflation would average around 13% in dollar terms.
Naylor also shared key findings from 2022 global gold demand trends. According to the study, gold continues to play an important role in a recessionary and inflationary environment.
Annual gold demand increased 18% to 4,741 tonnes (excluding over-the-counter) in 2022, the highest annual figure since 2011. The main driver of the surge was a 55-year high in purchase by central banks — 1,136 tonnes — led by those in emerging markets, such as Turkey and China.
Meanwhile, gold investment increased 10% to 1,107 tonnes. In contrast, jewellery consumption fell 3% in 2022 to 2,086 tonnes, while industry demand for gold dropped as well due to the global slowdown.