In 2023, Poland was the second-largest purchaser of gold. The Polish central bank added 130 tons of gold to its reserves last year, bringing them up to 359 tons, a 57% increase.
President Adam Glapiński of the Bank of Poland stated in 2021 a proposal to increase the nation's gold reserves by 100 tons. After reaching that target in September of 2023, the central bank continued to purchase.
Upon announcing the intention to increase its gold holdings, Glapiński said that owning gold was a question of stability and financial security.
Even if someone were to turn off the whole financial system and erase conventional assets based on computerized accounting records, gold would still be worth its current amount. Naturally, we don't think that this will occur. However, as they say, being prepared always pays off.
Furthermore, even in the worst-case scenario, the central bank must be ready. For this reason, gold has a specific role in our foreign exchange management system."
In May, Turkey added an additional 6 tons to its gold stockpiles, continuing to increase them. With the addition of approximately 40 tons of gold to its stockpiles, the Turkish central bank has become the largest buyer of gold so far in 2024.
Following the sale of 160 tons of gold in the spring of 2023, the Turkish central bank has been purchasing gold for a continuous 12 months.
India added an additional 4 tons of gold to its stockpiles in May as part of its ongoing gold purchase binge. Since 2017, the Reserve Bank of India has begun purchasing gold. The RBI has added more than 260 tons of gold to its holdings throughout that time.
The Times of India was informed by an Indian economist that the need to amass gold was motivated by both political and economic factors. He said that the US dollar's "reliability" had "diminished." The "noticeable decline" in trust in US dollar assets was pointed up by him.
"Considering the increased volatility in the FX market, elevated interest rates in the U.S., and, of course, also as the central banks in each economy would like to diversify the asset classes in which they are parking their reserves," an additional economist told the Times. "It makes a lot of sense (to invest in gold)."
Recently, India brought 100 tons of gold back into the country from the UK.
In May, the Czech Republic was the other major purchaser, increasing its gold holdings by three tons.
Notably missing from the May central bank gold purchase data was China. The Chinese were silent for the first time in eighteen months after increasing their gold stockpiles. Panicked gold sellers started in May when the Chinese reported no adjustments to their official stockpile.
It appears improbable that the Chinese are done adding gold to their stockpiles, despite the irrational outcry. Preliminary evidence suggests that China added gold to its holdings in June.
There are also rumors that China is enriching its holdings of gold outside of official records to a considerable degree.
In May, Kazakhstan was the top seller, reducing its stockpiles by eleven tons. Following a 6-ton rise in April, this occurs. Banks that purchase from indigenous producers, like those in Kazakhstan and Uzbekistan, often alternate between purchasing and selling.
There is no sign that central banks are losing interest in purchasing gold, even if their purchases of the yellow metal slowed down in May. In the next year, 29% of central banks want to increase the amount of gold in their reserves, according the latest World Gold Council study. It was the highest number since the survey's inception in 2018, according to the WGC.
Merely 3% said that they intended to reduce their gold holdings.
The World Gold Council said earlier this year that it is positive that central banks will continue to purchase gold, predicting that "2024 will be another solid year of central bank gold demand."
"Gold's usefulness in crisis response, diversification qualities, and store-of-value credentials were highly valued by central banks last year. The world doesn't seem to be any less unpredictable a few months into 2024, thus the arguments for gold ownership still hold true today."
The amount of gold purchased by central banks in 2022 was just 45 tons less than the multi-decade record.
The World Gold Council estimates that in 2023, central banks will have purchased 1,037 tons of gold net. For the second year in a row, central banks increased their overall reserves by more than 1,000 tons.
Gold purchases by central banks in 2023 increased from the previous record-breaking year. In 2022, central banks purchased 1,136 tons of gold altogether. Since the suspension of the dollar's convertibility into gold in 1971, it was the greatest amount of net purchases ever recorded, going back to 1950.
In 2023, China remained the largest customer.
According to ANZ Bank analysts, central banks should continue to purchase gold for at least the next six years.
These experts state that "the rise of non-reserve currencies and eroded confidence in U.S. fixed-income assets are other themes that might accommodate central bank gold buying."
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