World Gold Council says physical demand for gold surged in 2022 as the market saw record growth as compared to 8 years ago.

In its Q4 gold demand trends report, WGC said annual global gold demand jumped by 18% last year, hitting 4,741 tonnes, which is almost the level of 2011, when investment demand was exceptional.

The increase was helped by record demand in the fourth quarter, which amounted to 1,337 tonnes. The reason was the 110-tonne decline in investments in gold-backed ETFs, while outflows exceeded the 189 tonnes sold in 2021. Retail investors were the ones that led the increase as global bullion and coin demand rose to a nine-year high of 1,217 tonnes, up 2% from 2021. The report also said total investment demand rose 10% to 1,107 tonnes last year.

Sustained physical demand for gold also helped lift average annual prices to a new record high of $1,800 per ounce. This made gold one of the best-performing assets last year despite significant headwinds from the Fed's aggressive increase in interest rates. In fact, according to the World Gold Council, ETF demand will improve further in 2023, especially as the Federal Reserve is expected to end its aggressive rate hike cycle in the first half of the year. This is already seen at the beginning of the year as interest in gold-backed ETFs has begun to increase.

Another important pillar was the demand from central banks as they bought around 417 tonnes of gold in the fourth quarter. This increases the total amount bought for 2022 to 1,136 tonnes, the highest level since 1967.

However, demand for jewelry weakened in 2022. In China, which is the world's largest gold-consuming country, jewelry demand fell 15% to 571 tonnes last year, well below the 10-year average. Annual demand also fell by 2% to 600 tonnes in India, while in Europe and North America, it decreased by 4%.

Southeast Asian markets were the ones that saw the largest increase in jewelry demand, with Vietnam leading at 51%. Following it is Thailand at 17%. There are expectations that demand will recover in 2023.

In terms of the technology sector, demand for gold fell by 7% last year, driven by a 7% drop in demand for electronics.

Meanwhile, the 2% increase in supply prompted an 18% jump in overall gold demand.