- Global official gold reserves dropped by 71 tonnes (t) in April (Chart 1), according to our monthly analysis sourced primarily from the IMF1
- This was the first net decrease in reported gold holdings for over a year (March 2022: -1t).
Central bank demand flipped negative in April amid Turkish selling
2 June, 2023
Source: IMF IFS, respective central banks, World Gold Council
*Data as of 28 April 2023.
This may, on the face of it, seem like a remarkable about turn from central banks, which were a source of very strong gold demand in Q1.2 But the country-level data reveals that, far from a sudden wave of central bank selling, the drop in reserves was primarily due to Türkiye (Chart 2).
The Central Bank of Türkiye reported a decline in its official gold reserves of 81t, reducing its total gold reserves to 491t.3 Our analysis, based on published data and in-market conversations, indicates that this was a specific response to local dynamics rather than a change to their long-term gold policy: the gold was sold into Türkiye's domestic market to satisfy very strong bar, coin and jewellery demand following a temporary partial ban on gold bullion imports.4 It remains to be seen if this selling will continue and, if so, at what pace.
The other notable – albeit smaller – sellers during April were three banks who regularly buy gold from domestic production. Frequent buying and selling are not uncommon for central banks which buy gold from domestic sources. The National Bank of Kazakhstan reduced its official gold reserves by 13t to 319t, the third consecutive monthly sale in excess of 10t. Nonetheless, gold still represents 54% of total Kazakh reserves. The Central Bank of Uzbekistan sold for the second consecutive month, although substantially lower than in March. Its official gold reserves fell by 2t during the month, to 380t (69% of total reserves). The National Bank of the Kyrgyz Republic also sold 0.6t during the month.
Purchases were comparatively smaller this month. Four central banks reported an increase in their gold reserves. The largest purchase came from Poland - the Narodowy Bank Polski’s gold holdings rose by 15t to 243t, accounting for 9% of total reserves by the end of April.5 The People’s Bank of China continued its recent run of buying – now six consecutive months – lifting its gold reserves by 8t to 2,076t (4% of total reserves). The Czech National Bank (2t) and the Central Bank of Mongolia (1t) were the other reported buyers.
Chart 2: Türkiye’s April sale eclipsed all other activity during the month*
Source: IMF IFS, respective central banks, World Gold Council
*Data as of 28 April 2023. Note: chart only includes purchases/sales of a tonne or more.
Despite sizable net selling from central banks in April, we maintain our expectation for central banks to remain net gold purchasers in 2023, as we discussed in our most recent Gold Demand Trends (GDT). Our view is also supported by findings from our latest Central Bank Gold Reserves survey, which shows reserves managers remain broadly positive towards gold. It’s also worth noting that the Central Bank of Iraq recently announced a 2.5t purchase in May and signalled more to come.6 Due to its timing, though, this purchase will be reflected in next month’s central banks' activity summary.
Of course, further selling could challenge the outlook which we will update, based on all available information, in our next GDT.
Footnotes
1Based on monthly IMF IFS data and supplemented with data from respective central banks where available and not reported through the IMF at the time of publication. IMF IFS data is reported with a two-month lag, and while most institutions report on a regular basis, some may report with a – sometimes significant – delay. Figures may be subsequently revised as more data becomes available. The data used here informs but is distinct from the central bank demand estimates we report in Gold Demand Trends. Please see footnote 3 for more information.
2For purposes of Gold Demand Trends, central bank demand is defined as net purchases (i.e. gross purchases less gross sales) by central banks and other official sector institutions, including supra national entities such as the IMF and sovereign wealth funds where applicable. Our quarterly central bank demand data is sourced from Metals Focus, whose proprietary estimates of official sector activity incorporate various sources, including IMF IFS reports, international trade data, and others. As such, IMF IFS data is a subset of what is included in Gold Demand Trends. Both data sets are subject to revision as new information is made available and/or to accommodate late or updated data reported by official institutions.
3Türkiye official sector gold reserves are the sum of central bank-owned gold and Treasury gold holdings. This is equivalent to gross gold reserves less all gold held at the central bank in relation to commercial sector gold policies (such as the Reserve Option Mechanism (ROM), collateral, deposits and swaps). For information on this methodology, click here.
4For more, see: Turkey to suspend some gold imports after earthquake -Bloomberg News | Reuters
5For more, see: Official reserve assets | NBP
6Iraq Boosts Gold Reserves by 2% in Single Day in Gradual Buildup, Bloomberg, 29 May 2023.
