Gold Demand Trends Full Year 2022

Two years on from dropping to its lowest level in a decade, central bank demand has rebounded strongly. 2022 saw the second consecutive y-o-y increase in demand from this sector, with net purchases totalling 1,136t. This marked a banner year for central bank buying: 2022 was not only the thirteenth consecutive year of net purchases, but also the highest level of annual demand on record back to 1950, boosted by +400t demand in both Q3 and Q4.

Central bank net purchases in Q4 totalled 417t, lifting H2 total buying to 862t. Echoing Q3, data for the final quarter of the year was again a combination of reported purchases and a substantial estimate for unreported buying.¹ Should more information about this unreported activity become available, these estimates may be revised.

Gold has been ‘en vogue’ with central banks since they became net purchasers on an annual basis in 2010. Our most recent annual central bank gold survey highlights two key drivers of central banks’ decisions to hold gold: its performance during times of crisis and its role as a long-term store of value. It’s hardly surprising then that in a year scarred by geopolitical uncertainty and rampant inflation, central banks opted to continue adding gold to their coffers and at an accelerated pace.

And extending the trend that began in 2010, emerging market central banks accounted for the bulk of last year’s reported demand.²

China resumes buying in 2022. The most significant announcement of the year came towards its end, when the People’s Bank of China (PBoC) reported the first increase in its gold reserves since September 2019. In November and December the PBoC announced total gold purchases of 62t, lifting its total gold reserves to over 2,000t for the first time. These announcements were significant given China’s historic position as a large buyer of gold, having accumulated 1,448t between 2002 and 2019. However, the Central Bank of Turkey reported the largest buying in 2022. Its official gold reserves swelled by 148t to 542t, the highest level on record.³

Regionally, the Middle East was an active buyer of gold during the year. Egypt (47t), Qatar (35t), Iraq (34t), the United Arab Emirates (25t) and Oman (2t) significantly boosted their gold reserves. Central Asia also saw a healthy level of buying. Despite starting the year as a net seller, the Central Bank of Uzbekistan ended the year as a net purchaser of gold, with its gold reserves rising by 34t. The Kyrgyz Republic (6t) and Tajikistan (4t) were also notable purchasers.

The Reserve Bank of India remained a buyer of gold in 2022, adding 33t, 57% lower than 2021 when it purchased 77t. Intervention in the FX market to support the rupee during the year caused a decline in FX reserves of US$70bn, which may have impacted the bank’s gold buying . Its gold reserves now stand at 787t (8% of total reserves).

Elsewhere, Ecuador (3t), the Czech Republic (1t), and Serbia (1t) were also noteworthy buyers. Ireland was the solitary developed market central bank to increase its gold reserves during the year, with purchases of 3t in Q1.

But while purchases were abundant, the year saw some selling too. The National Bank of Kazakhstan was 2022’s largest seller, reducing its gold holdings by 51t to 352t (58% of total reserves). In a statement to Bloomberg, the National Bank of Kazakhstan indicated that it planned more gold sales in 2023, although it had previously stated that sales may be dependent on market conditions. As we have noted in earlier reports, it is not uncommon for central banks who regularly purchase domestic gold production to swing between buying and selling.

Germany registered net sales of 4t as part of its ongoing coin-minting programme, while Sri Lanka (3t), Poland (2t), the Philippines (2t), Mongolia (2t) Bosnia and Herzegovina (1t), Cambodia (1t) and Bhutan (1t) were all sellers of at least one tonne.

The Central Bank of Russia announced that it would resume buying gold from domestic producers following the imposition of international sanctions. But no further data has been reported since a 3t decline in its gold reserves in January. We continue to monitor developments.

Looking ahead, we see little reason to doubt that central banks will remain positive towards gold and continue to be net purchasers in 2023. However, by how much is difficult to call, as evidenced by our expectations at the start of 2022. But it is also reasonable to believe that central bank demand in 2023 may struggle to reach the level it did last year. Read more in the Outlook section.