Retail investment demand for gold bars and coins as well as central bank purchases pushed the global gold demand by 28 per cent to 1,181.5 tonnes in the September quarter, according to the World Gold Council report.
The total global demand stood at 921.9 tonnes during the July-September quarter of 2021, the World Gold Council's 'Gold Demand Trends Q3 2022' showed on Tuesday.
Investment was down 47 per cent year-on-year as gold backed Exchange Traded Fund (ETF) investors responded to a challenging combination of higher interest rates and a strong US dollar with significant outflows of 227 tonnes.
The outflow was the largest since the second quarter of 2013.
The ETF outflow during the third quarter of 2021 was just 26 tonnes, the report said.
However, bar and coin investment jumped 36 per cent year-on-year in the September quarter to 351.1 tonnes compared to 258.9 tonnes last year.
The bar and coin sector had its strongest during the third quarter since 2011, mainly due to surging global inflation levels fuelled demand across most markets, with further impetus generated by weakening gold price July-September, the report said.
The average price of gold was down 7.59 per cent sequentially during the third quarter of 2022 to $1,728 an ounce compared to $1,870 during the April-June period this year, WGC Regional CEO, India, Somasundaram PR told PTI.
According to the report, in the September quarter, central bank buying hit an all-time quarterly record at 399.3 tonnes compared with 90.6 tonnes in the same period of 2021.
Turkey remained the largest reported gold buyer this year adding 31 tonnes in the third quarter followed by Uzbekistan buying 26 tonnes and Qatar 15 tonnes during July-September.
As per the report, the Reserve Bank of India (RBI) continued with its long-standing gold purchasing strategy in the third quarter and bought 13 tonnes in July and 4 tonnes in September, pushing its gold reserves to 785 tonnes.
Jewellery consumption continued to rebound and is now back to pre-pandemic levels, up 10 per cent reaching 523.1 tonnes compared to 476.5 tonnes in the same period of 2021, it said.
The report noted that much of this growth was led by India's urban consumers who drove up demand 17 per cent y-o-y to 146.2 tonnes.
Similarly, growth was also seen in much of the Middle East, with Saudi Arabian jewellery consumption up 20 per cent since the third quarter of 2021, and United Arab Emirates up 30 per cent for the same period.
Meanwhile, Chinese jewellery demand saw a modest 5 per cent increase y-o-y driven by improved consumer confidence and a dip in the local gold price, prompting the release of some pent-up demand.
Regarding supplies, the report showed that it went up by 1 per cent to 1,215.2 tonnes during the September quarter compared to 1,208.2 tonnes in the same period last year.
Mine production was up 2 per cent against the same period of 2021, with gold mining witnessing its sixth consecutive quarter of growth.
However, recycling was 6 per cent lower y-o-y in the September quarter at 275.8 tonnes against 292.8 tonnes last year, as consumers held onto their gold in the face of surging inflation and an uncertain economic outlook.
"Despite a shaky macroeconomic environment, demand this year has reflected gold's status as a safe haven asset, underscored by the fact that it has outperformed most asset classes in 2022.
"Looking ahead, we anticipate central bank buying and retail investment to remain strong and that could help offset potential declines in OTC (Over The Counter) and ETF investment that may prevail if the dollar strength persists," WGC Senior Markets Analyst Louise Street said.
WGC also expects to see jewellery demand continue to perform strongly in some regions such as India and Southeast Asia, she added.