World Gold Council, Central Bank Gold Reserve, RBI Gold Holding: The recently released Full Year 2023 Gold Demand Trends report revealed yet another remarkable year for central bank gold demand, though it fell slightly short of the record set in 2022. Krishan Gopaul, Senior Analyst at EMEA World Gold Council, emphasized the critical role of central bank gold demand in supporting the gold market.
Attention has not only been on past achievements but also on future trends. Will central banks persist in buying gold, and if so, what are the reasons and quantities?
In January 2024, central banks reported an increase in global official gold reserves by 39 tonnes. This marked more than double the revised December net purchases of 17 tonnes and the eighth consecutive month of net purchases.
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Six central banks increased their gold reserves by a tonne or more during the month, all being regular buyers lately:
- The Central Bank of Turkey led the purchases by adding 12 tonnes, raising total gold holdings to 552 tonnes, just 6% off the all-time high of 587 tonnes set in February 2023.
- Gold reserves at the People’s Bank of China increased by 10 tonnes, marking the 15th consecutive month of additions, with total holdings now at 2,245 tonnes.
- The Reserve Bank of India saw its gold reserves rise by nearly 9 tonnes, the first monthly increase since October 2023, reaching a total of 812 tonnes.
- The National Bank of Kazakhstan purchased 6 tonnes of gold, the first monthly addition since January 2023.
- The Central Bank of Jordan bought 3 tonnes in January, the second consecutive month of additions, raising total gold holdings to 75 tonnes.
- The Czech National Bank added nearly 2 tonnes, marking the eleventh consecutive month of buying, with gold reserves surging from 12 tonnes to more than 32 tonnes (+170%) over that period.
Reported selling was limited in January, with the only noteworthy sale coming from the Central Bank of Russia (CBR), which saw a decline of 3 tonnes, a pattern consistent with the country’s coin minting program.
The robust buying in January supports the expectation that 2024 will be another solid year for central bank gold demand. Central banks, especially those in emerging markets, have demonstrated a long-term strategy toward gold accumulation since 2010.
The reasons behind central banks’ continued interest in adding gold to their reserves remain consistent with last year’s emphasis on gold’s value in crisis response, diversification attributes, and store-of-value credentials. Amid ongoing global uncertainties, the relevance of these reasons for owning gold remains as pertinent as ever.