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(Kitco News)-According to data from the Australian Government’s Department of Industry, Science, Energy and Resources (DISER), world gold consumption is expected to increase by 8.7% to 4,057 tons in 2021, with an average annual growth rate of 5.7 in 2022 and 2023 %, reaching 4,535 tons by 2023, mainly driven by jewelry consumption.

According to the report, jewellery demand is expected to rebound strongly in 2021 from the sharp decline in 2020, with a year-on-year increase of 32% to 1,855 tons. China is expected to make the greatest contribution to this recovery.

"Government stimulus, promotion and seasonal patterns are expected to boost gold demand in the second half of 2021. In the United States, gold jewelry consumption in the first half of 2021 increased by 55%, and it is expected to remain strong for the rest of the year. After the effective launch of COVID- 19 Propelled by vaccines, improved consumer confidence and high household savings," DISER said.

In Europe, as the Eurozone economies continue to fight the COVID-19 pandemic, jewellery consumption is expected to weaken. In India, the harsh monsoon season may affect the economic recovery in rural areas, thereby affecting the demand for gold during weddings and festivals starting in October 2021.

In Southeast Asia, the surge in COVID-19 cases may reduce the demand for gold in the September 2021 quarter. On May 21, 2021, the Russian government introduced legislation to allow the country's national wealth fund and the Central Bank of Russia to purchase and hold gold banks. The author of the report pointed out that this may cause Russia to increase its shareholding.

Importantly, DISER pointed out that global gold consumption is expected to grow at an average annual rate of 5.7% in 2022 and 2023, reaching 4,535 tons by 2023. The growth is expected to be mainly driven by jewelry consumption, which is expected to increase by 9.1% annually in 2022 and 2023, reaching 2,208 tons by 2023.

"Supported by rising consumer confidence and income, demand for jewelry in China is expected to remain strong. DISER said that as more people are vaccinated and the economy recovers, demand in India is expected to recover in 2022 and 2023.

In addition, gold retail investment is expected to help global gold consumption. The demand for gold bars and gold coins is expected to grow at an average annual rate of 1.0% between 2022 and 2023, reaching 1,207 tons by 2023.

DISER added that many central banks are expected to shift their focus from loose liquidity requirements-supporting economic growth during the COVID-19 pandemic-to reserve diversification-to help protect their wealth.

“Therefore, the central bank’s gold purchases are expected to increase by an average of 9.2% per year during the outlook period and will reach 600 tons by 2023,” the report predicts.

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