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The World Gold Council reported Wednesday that central banks bought 77 tonnes of gold in August, an increase of 38% compared to July's purchases. The WGC noted that during the last three months central banks have bought 219 tonnes of gold. The analysts said that central bank demand is on course to see healthy demand for the year.
“This recent buying suggests that we have now firmly moved past the net selling we saw in April and May, which was primarily driven by heavy, non-strategic selling from Turkey,” said Krishan Gopaul, senior analyst at the WGC, in the report. “We are therefore confident that the long-term trend of healthy central bank demand remains in place.”
However, while demand has been robust, Gopaul noted that buying activity has been limited to a small number of central banks. China continues to dominate the market after it bought 29 tonnes of gold in August.
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The National Bank of Poland also remains a significant buyer after purchasing 18 tonnes of gold in August. Gopaul said that Poland's national bank has bought 88 tonnes of gold so far this year and is on target to reach the 100 tonne target it announced in 2021.
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Another central bank the WGC has been watching closely is Turkey, which bought 15 tonnes of gold in August. The central bank continues to rebuild its reserves after significant selling in April and May.
Other central bank buyers included Uzbekistan, which increased its gold reserves by 9 tonnes, the Reserve Bank of India, Czech National Bank and the Monetary Authority of Singapore which each bought 2 tonnes of the precious metal in August, and National Bank of the Kyrgyz Republic, which purchased 1 tonne.
The WGC said that there were no notable gold sellers last month. However, Gopaul said that they are looking at reports that the Central Bank of Bolivia “monetized” 17 tonnes of its gold reserves, according to reports from Bloomberg.
“If confirmed, this would represent a 40% decline in its gold reserves (tonnage terms). Until confirmed, however, there is ambiguity in the use of “monetise” as this could mean several things, including, for example, outright sales or swap agreements. Currently, data on gold reserves at the Central Bank of Bolivia is not available after April, so we await more information,” Gopaul said.
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Russia's Finance Ministry will spend 398.72 billion rubles ($4 billion) on gold and foreign currencies between October 6 and November 7, with the daily volume to be equivalent to 18.12 billion rubles ($182 million), the Ministry announced on Wednesday.
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The International Monetary Fund’s (IMF) latest International Financial Statistics (IFS) report showed that Russia’s central bank increased their gold reserves in August, and they have now returned to the level they were at the beginning of 2023.
“IMF IFS data shows #gold reserves at the Central Bank of Russia rose by 3 tonnes in August,” wrote Krishan Gopaul, senior analyst at the World Gold Council in a tweet. “This means that its gold reserves are back to where they were at the start of the year - 2,333 tonnes.”
While Russia is intent on increasing its gold reserves to help mitigate Western economic sanctions in response to the Ukraine conflict, the country has been forced to use its gold reserves to settle international transactions and to cover budget deficits.
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Never heard of them.National Bank of the Kyrgyz Republic
Never heard of them.
While the definitive IMF data has yet to be released, the early returns on gold purchases by central banks show that buying was as strong as ever in September, according to Krishan Gopaul, senior analyst at the World Gold Council.
Gopaul shared the latest data in a series of posts on Twitter, which were gleaned from reports and media statements by the central banks themselves. The largest single purchaser last month remained China, which maintained its record-setting pace of precious metals buying.
“Data from the People's Bank of China shows they bought gold again in September,” Gopaul wrote. “Gold reserves rose by 26t, lifting their reported 2023 buying to 181t.”
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India’s central bank also made a big splash in the gold market last month with its largest single purchase in 15 months. “Weekly data from the Reserve Bank of India suggests its #gold reserves rose by 7 tonnes in September - all added in the last week of the month,” he wrote. “This would be the largest monthly gold purchase by the RBI since July 2022 (13 tonnes), and lifts gold holdings to 807 tonnes.”
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Poland was another major buyer in September, with the Polish central bank increasing its total gold holdings by 6% last month alone.
“Based on data published by the National Bank of Poland suggests they have added ~19 tonnes to their gold reserves in September, taking total gold holdings to ~330 tonnes,” Gopaul said, adding that the WGC would confirm the exact figures once the IMF data is released.
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“Although shy of breaking the Q3 2022 record, year-to-date demand has reached 800t, a new record for our data series. This strong buying streak from central banks is expected to stay on course for the remainder of the year, indicating a robust annual total again in 2023,” analysts at the World Gold Council said in their Quarterly Demand Trends report for the third quarter. “While there is a nucleus of committed regular buyers, the range of countries whose central banks have added to their reserves over recent quarters is broad-based.”
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“The strength of buying has, to some degree, exceeded our expectations. While we were confident that central banks would remain net purchasers in 2022, we thought it unlikely that it would match last year’s record buying volume. Should buying continue to be strong in Q4, the full-year total could get closer than we anticipated,” the analysts said in the report. “Our view is based on our survey findings, as well as the broad base of buying, which suggests that increasing gold allocations are becoming an accepted prudential strategy across the segment.”
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While central banks' gold purchases have significantly changed the dynamic in the marketplace, price momentum still needs to see a pickup in investment demand. The WGC noted that physical bar and coin demand remains solid as institutional investors shed their holdings in gold-backed exchange-traded funds (ETFs).
The WGC noted that investment demand continues to be dominated by opaque OTC purchases.
“OTC investment totaled 120t in Q3. This opaque source of demand was again evident as the gold price found firm support for much of Q3, despite ETF outflows and falling COMEX futures net longs,” the analysts said.
The WGC said that investment demand for the third quarter totaled 157 tonnes, up 56% compared to last year; however, demand is down sharply compared to the long-term five-year average of 315 tonnes.
While investment demand is down, the WGC does see the selling momentum starting to ease. The ETF market saw outflows of 139 tonnes, far smaller compared to the 244 tonnes that fled the global ETFs in the second quarter.
Finally, bar and coin demand dropped to 296 tonnes, down 14% from last year; however, the market remained firmly above the five-year average of 267 tonnes.
Looking ahead, analysts at WGC expect that EFT demand will pick up as gold prices start the fourth quarter around $2,000, drawing renewed investor focus.
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Central banks’ gold buying slowed in October but did nothing to alter the overall trend of robust buying that has captured the attention of gold investors. Reported global net purchases totalled 42 tonnes (t) during the month, 41% lower than September’s revised total of 72t, but still 23% above the January-September monthly average of 34t.
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Wednesday, the WGC published its 2023 fourth quarter and full-year gold demand trends report, saying that annual gold demand, excluding over-the-counter markets, totaled 4,448 tonnes, a 5% drop below robust demand reported in 2022; however, when including OTC markets and stock flows total gold demand rose to a record 4,899 tonnes last year.
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OTC demand, was a stark contrast to visible investment demand as global gold-backed exchange-traded funds, saw a third consecutive year of outflows. The WGC noted that 244 tonnes of gold flowed out of the ETF market last year, a drop of 7% compared to 2022 holdings.
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Along with the ETF market, the physical bar and coin demand also declined last year, falling to 1,190 tonnes, a drop of 3% from 2022. Like ETF markets, bar and coin demand was driven lower by weak European demand.
Looking ahead, with central banks expected to lower interest rates at some point this year, Artigas said the WGC expects to see renewed ETF inflows. At the same time, he added that OTC markets should remain a solid source of support.
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Another major pillar of strength for the gold market in 2023 was near-record demand from central banks.
Artigas noted that at the start of last year, the WGC was cautiously optimistic that central banks would be steady buyers of gold; however, by the third quarter of last year, demand was on pace to surpass the previous year’s record.
According to the final estimates, central banks bought 1,037 tonnes of gold last year, missing the 2022 record by only 45 tonnes. Artigas noted that central bank demand has nearly doubled the average in the last ten years.
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China’s central bank slowed its gold purchases at the start of the year; however, it is on pace to match and potentially exceed its last shopping spree nearly eight years ago.
Wednesday, Krishan Gopaul, market analyst at the World Gold Council, said in a social media post that the People’s Bank of China bought 10 tonnes of gold in January.
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Looking ahead, analysts expect that China will continue to increase its gold reserves. Even after 15 months of straight buying, China’s gold reserves account for roughly 4% of total reserves, well below reserves held by developed central banks.
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well they say over half the population has less than $500 in the bank right now.....and this is a rich country supposedlyOne day physical will be too expensive for common people to buy.
that's why we love silver : )One day physical will be too expensive for common people to buy.
The factors that supported central banks’ near-record gold purchases in 2023 continued into the new year, and if January is any indication, 2024 will be another blowout year for the yellow metal, according to Krishan Gopaul, Senior Analyst, EMEA at the World Gold Council.
Gopaul noted that after the record-setting 2022 and the strong follow-up last year, “central bank gold demand has become a key support for gold.”
“Naturally, the focus has been not only on what has happened but also on what is to come,” he said. “Will central banks continue to buy gold, and if so why and how much?”
Gopaul said the answers to these questions are beginning to emerge with the latest central bank purchase data, and they bode well for gold bugs. “In January, central banks reported that they increased global official gold reserves by 39t.” he wrote. “This was more than double the (revised) December net purchases of 17t, and the eighth consecutive month of net purchases.”
Gopaul noted that all six of the central banks which increased their gold reserves by one tonne or more in January have been regular buyers.
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Just last October those days are over. The world is changing some more.You can find 100 koronas near spot and cheap 1 oz krugerrands if you look. Lowest I paid for 1/10 gold was $185 last year and those are $210 cheapest now.
Where do they vault those tons... who is the custodian ...
I don't know how accurate this is, but (from March 2023):
Central Banks that Keep Their Gold in Another Country
Which Central Banks keep their gold in other countries and why?bunker-group.com
I am still working on my first ton.
View attachment 12360
i am of the school that unless the government restricts ownership ........then supply will always meet demand ...... its just a matter of price IE at a million dollars a oz supply should widen and demand should dry up untill they reconcile each otherThere is going to come a time when all the excess supply has dried up and only current production will be available for sale.
If there were excess supply wouldn't the gold price be lower?There is going to come a time when all the excess supply has dried up and only current production will be available for sale.
I guess the market is in equilibrium if there are no shortages or selling under spot or way over spot? Those $10 USD gold Indians have some of the highest premiums, but if somebody tried to corner the market who knows what would happen?
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