Quiet summer for central bank buying

Central banks bought 28.4t of gold in August,¹ 9% less than in July. Leaving aside January’s 11.2t net sale, this is the lowest level of monthly net purchases so far this year.

Central bank gold buying slowed over the summer

Central bank net purchases of gold*

This slower pace of buying over the summer was partly due to the absence of any sizeable purchases. Central bank demand between March-June was marked by several large-scale purchases from Thailand, Hungary, and Brazil, which boosted global net purchases in H1 to 333t (39% above the five-year H1 average).

By the end of August, just six central banks have accounted for the ten largest purchases so far this year, totalling a remarkable 264.5t.

Six central banks have accounted for the ten largest monthly purchases in 2021

Individual central bank monthly purchases in tonnes*

*Data to 31 August 2021
Source: IMF IFS, Respective Central Banks, World Gold Council

At the gross level, central banks bought 30t in August. Interest was limited to a small group of familiar faces, with recent buyers India (12.9t), Uzbekistan (8.7t), Kazakhstan (5.3t) and Turkey (2.8t) all adding to their gold reserves once again.

On the other hand, gross sales were insignificant. They totalled less than two tonnes, with Qatar registering the largest drop in gold reserves of -0.9t.

The chart above shows a clear downward trend in net buying since March. What, if anything, can we conclude from this? Well, it’s probably too early to suggest the recent trend of buying is running out of steam. Central banks have stated their positive sentiment towards gold, and it’s unlikely that this will change imminently. But without larger purchases like we saw between March and June, we anticipate a more modest levels of buying going forward.

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