Central Banks are Still Buying Gold While its Price Remains Around $1850

The World Gold Council (WGC) has reported that central banks remain highly interested in gold at the start of 2023, following a record-setting year in 2022.

In a note on Thursday, the WGC stated that central banks had purchased 31 tonnes of gold in January, representing a 16% monthly increase. Senior analyst Krishan Gopaul noted that this was consistent with the reported range of 20-60 tonnes of monthly purchases seen over the past ten consecutive months.

The majority of this purchasing activity was carried out by three established players – Turkey, China, and Kazakhstan. Turkey, the largest official gold buyer in 2022, purchased 23 tonnes in January, bringing its total gold reserves to 565 tonnes. Meanwhile, China, which had aggressively increased its gold purchases at the end of last year, bought 15 tonnes in January on top of the 62 tonnes reported in November and December, taking its total gold reserves to 2,025 tonnes. Kazakhstan’s central bank added four tonnes of gold, bringing its total reserves to 356 tonnes.

The ECB saw a unique addition of two tonnes of gold, with Croatia buying the gold in December as part of a transfer of reserve assets upon joining the currency union.

However, Uzbekistan’s central bank took a different direction by selling 12 tonnes of gold in January, bringing its total gold reserves to 384 tonnes or 66% of its total reserves. Gold prices rose from $1,860 an ounce to around $1,960 an ounce in January.

According to the World Gold Council (WGC), central banks will continue to have a strong interest in gold this year. The WGC report stated that it sees little reason to doubt that central banks will remain positive towards gold and continue purchasing it in 2023, given the healthy data in January. Last year, central banks bought a record-high 1,136 tonnes of gold, which was more than a 150% increase from the previous year.

The WGC’s Gold Demand Trends report highlighted geopolitical uncertainty and high inflation as key reasons for central banks to hold gold. The Central Bank of Turkey bought the most gold among all central banks, seeking protection against unchecked inflation as Turkey’s inflation rate accelerated to 85% in the fall before slowing to 64% in December. China’s central bank, the People’s Bank of China (PBoC), resumed gold buying for the first time since 2019, making it a highlight of last year.

The World Gold Council (WGC) has reported that central banks remain highly interested in gold at the start of 2023, with purchasing activity showing a 16% increase in January. Three established players – Turkey, China, and Kazakhstan – were the major buyers, with Turkey being the largest official gold buyer in 2022. The WGC expects central banks to continue being net purchasers in 2023, as highlighted in its Gold Demand Trends report, which cited geopolitical uncertainty and high inflation as key reasons for central banks to hold gold. The Central Bank of Turkey bought the most gold, seeking protection against unchecked inflation, while the People’s Bank of China resumed gold buying for the first time since 2019.