Gold Demand Trends Q2 2023

Following a record-breaking start in Q1, central bank gold demand slowed significantly in Q2: global net purchases totalled 103t between April and June (-64% q/q, -35% y/y). But this has done little to diminish the strong overall central bank buying so far in 2023: H1 demand of 387t is the highest in our data series back to 2000. 

The slower pace of Q2 buying was due to a relatively lower volume of purchases combined with a much higher volume of sales, particularly from Turkey.¹ Having been a leading buyer throughout most of Q1, the Central Bank of Turkey (TCMB) abruptly flipped to being a significant net seller in March.² Selling continued in April and May before purchasing resumed in June – resulting in net Q2 sales of 132t.

The TCMB sold gold into the local market in response to very tight conditions following a temporary partial ban on gold bullion imports at a time of economic and political uncertainty resulting in very strong domestic gold demand.³ As such, we believe the selling was tactical rather than a strategic change in Turkey’s long-term gold policy. This view was reinforced by the TCMB resuming purchases in June. Aside from Turkey, Kazakhstan, Uzbekistan and Germany sold a combined 25t in Q2.

Turkey’s gold reserves have fallen by a net 102t y-t-d, while seven other central banks reported  declines in their reserves at the end of H1. Kazakhstan (38t), Uzbekistan (19t), Cambodia (10t), Russia (3t), Germany (2t) – likely related to coin-minting – Croatia (2t) – due to a transfer to the ECB upon joining the eurozone – and Tajikistan (1t) were the other notable sellers, all of which highlight the scale of Turkish selling.

In contrast, nine central banks were net purchasers during the first half of 2023 – based on data available at the time of writing  – with three major buyers accounting for the bulk of the total. The People’s Bank of China reported adding 103t during H1, extending its monthly buying streak to eight months. Its gold reserves totalled 2,113t (4% of total reserves) at the end of June. The Monetary Authority of Singapore was the second largest buyer during H1, adding 73t, followed by the National Bank of Poland, which bought 48t. The six other H1 buyers all made significantly smaller purchases: India (10t), Czech Republic (8t), the Philippines (4t), Iraq (2t), the European Central Bank (2t) – related to the transfer of gold from Croatia as it joined the euro area – and Qatar (2t).

Selling activity in Q2 has done little to dent the underlying positive trend in central bank gold demand. Findings from our latest Central Bank Gold Reserves Survey – now in its sixth year – shows sentiment towards gold remains positive. Seven in ten respondents believe that global gold reserves will rise over the next 12 months – a significant increase from last year's survey. As such, we remain optimistic on central bank gold demand over the coming quarters, although it is unlikely to match the levels of demand seen in H2 last year.