30 July, 2024
| Tonnes | Q2'23 | Q2'24 | Year-on-year % change |
|
|
Central banks and other institutions |
173.6 | 183.4 |
|
6 |
Source: Metals Focus, World Gold Council
Following a record-breaking start to the year, central bank gold buying slowed sharply during Q2, falling 39% q/q to183t. But this is still a very healthy level of buying, 3% above the five-year quarterly average of 179t. And it extends the long-term positive demand trend from this sector. Combined with Q1 net purchases, central bank gold demand in H1 totalled 483t, the highest first half year in our data series.2
While reported buying eased during the quarter, so too did sales. Activity remained firmly driven by emerging markets (EM), with the latest quarter seeing 14 EM central banks increasing or decreasing their gold reserves by a tonne or more.3 By comparison, only a single developed market central bank added gold during Q2.
The National Bank of Poland (NBP) became the joint largest buyer in Q2. The bank’s first purchase since Q4 2023 added a net 19t to its gold reserves and lifted its total gold holdings to 377t, accounting for 13% of total reserves. At a news conference in early June, Governor Adam Glapinski reiterated his plan to increase gold’s share of total reserves to 20%.4
The Reserve Bank of India (RBI) continued its gold buying streak in Q2 – also adding 19t to its gold reserves. The RBI has added gold every month so far this year, with y-t-d net purchases totalling 37t – more than its annual net buying in both 2022 (33t) and 2023 (16t).
In April, Governor Shaktikanta Das stated:,“we are building up gold reserves, the data is released from time to time…”.5 Its gold reserves now sit at 841t, or 10% of total reserves.6
The Central Bank of Turkey added 15t to official gold reserves in Q2, taking its y-t-d net purchases to 45t, the largest of any central bank.7 Unlike H1 last year, which saw heavy selling from the central bank (net sales of 102t) to relieve local market tightness, buying this year has been uninterrupted throughout the quarter. Total official gold reserves now stand at 585t (34% of total reserves).
The Central Bank of Uzbekistan (7t), Czech National Bank (6t), Central Bank of Qatar (4t), Central Bank of Russia (3t), Central Bank of Iraq (3t), Central Bank of Jordan (1t) and National Bank of the Kyrgyz Republic (1t) were the other buyers of note during Q2. The Monetary Authority of Singapore (4t) was the only developed market central bank to report an increase in gold reserves during the quarter.
The People’s Bank of China (PBoC), reported a sharp slowdown in its gold buying during Q2. Following a 2t net purchase in April, no further changes to its gold reserves were reported in May or June. Between November 2022 and April 2024, the PBoC reported gold buying of 316t, taking its gold reserves to 2,264t. Owing to the rally in the gold price this year, gold now accounts for 5% of the PBoCs total reserves, the highest share since 1996.
Some net sales also took place during the quarter, although they were modest in comparison to net buying. Only two central banks saw their gold reserves decline by a tonne or more: the Central Bank of the Philippines (12t) and the National Bank of Kazakhstan (12t).
Similar to previous quarters, the unreported component of demand was significant in Q2. This element of our official sector demand estimate accounted for 67% of the total.
During Q2, both the Reserve Bank of India and the Central Bank of Nigeria were reported to have repatriated gold from the UK and US respectively.8,9 Such activity represents a change only in location - not ownership - of gold, and therefore has no impact on our demand estimates. It does, however, highlight the fact that some banks place importance on domestic storage of gold.
The outlook remains positive for central bank gold demand; a view supported by the findings of our recent central bank survey, in which 81% of respondents say they expect global central bank gold holdings to increase in the next 12 months and 29% expect their own institution’s gold reserves to rise.
The survey also highlights the top reasons for central banks to hold gold, among which safety seems to be a primary motivation. Respondents indicated that its role as a long-term store of value/inflation hedge, performance during times of crisis, effectiveness as a portfolio diversifier, and lack of default risk remain key to gold’s allure.
Based on the first half of the year, and the findings from our survey, we maintain our expectation that central banks will remain significant net purchasers throughout 2024. On current form, central banks appear on course for another sizeable annual total, but it remains to be seen whether this will match or exceed the volumes of the previous two years.
As reported at the time of writing. For purposes of Gold Demand Trends, central bank demand is defined as net purchases (i.e. purchases less 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, international trade data, and others. As such, IMF IFS publicly reported data is a subset of the central bank gold demand reported 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.
Our quarterly data series extends back to 2000.
Country-level data correct at the time of writing. Due to lags in reporting and the timing of publication of Gold Demand Trends, not all country-level data will reflect the full quarter.
Our central bank gold reserve rankings can be found here: Central Banks Gold Reserves by Country | World Gold Council.
Turkey 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. Please follow this link for information on this methodology.
