Gold demand surged 18% year-on-year to hit 4,741 tons in 2022, the highest annual total in a decade, according to the World Gold Council's latest report.
The document highlights the hefty central bank buying and persistently strong retail investment as the driving forces behind the growth.
The central bank demand more than doubled in 2022, reaching 1,136 tons, a new 55-year record high.
The fourth quarter saw purchases reach 417 tons, bringing the total for the second half of 2022 to over 800 tons.
Investment demand in 2022 rose 10% due to a slowdown in ETF outflows and strong demand for gold bars and coins.
Gold bars and coins continued to be popular with investors in several countries worldwide, particularly Europe, where demand surpassed 300 tons, and the Middle East, where demand rose 42%.
Jewellery demand, however, softened slightly, down 3% at 2,086 tons, mostly due to the sharp drop in Chinese demand due to COVID-19 lockdowns. The gold price rally in the fourth quarter also contributed to the decline in jewellery demand.
Total annual supply increased 2% to 4,755 tons, surpassing pre-pandemic levels, with mine production reaching a four-year high of 3,612 tons.
Louise Street, a senior markets analyst at the World Gold Council, said: “Looking ahead to 2023, a challenging economic environment and a potential global recession could lead to a change in gold investment trends.
"If inflation decreases, it could impact gold bar and coin investment. However, a weakening US dollar and moderating pace of interest rate hikes could benefit gold-backed ETF demand.
"Jewellery consumption is expected to remain resilient, boosted by pent-up demand in China and weakened by a squeeze on consumer spending if there's a more severe downturn. Gold has a history of performing well during economic turbulence, highlighting its value as a long-term, strategic asset."