Central Banks Buy Gold at Fastest Pace in 55 Years
Central banks, which buy gold in large amounts, are buying more than they ever have in the past five and a half decades. This is due to the rising price of the metal, according to the Bank of England. The UK’s central bank is the world’s third-largest buyer of gold, behind China and Russia, and its purchases have increased in recent months.
China
The World Gold Council has estimated that central banks purchased a record 399 tonnes of gold in the third quarter of 2022. This is a significant increase from the previous quarter’s 220 tonnes. It also represents the fastest buying rate in 55 years.
There is some debate over whether or not the record is a structural shift or simply a response to the recent fall in gold prices. One thing is clear: the global debt crisis and devaluation of the US Dollar are driving gold demand.
Although it is true that China’s central banks are currently purchasing gold at the fastest pace in 55 years, there are other reasons why this is the case. For one, China is facing pressure to cut its reliance on the US Dollar. In fact, the US Treasury Secretary recently warned that China would be cut off from the dollar financial system.
Russia
Central banks in Russia have been buying gold at the fastest pace since 1967, according to World Gold Council estimates. The report also claims that central banks bought more than 400 tonnes of gold in the third quarter, the first time since quarterly records began in 2000 that this was the case.
Analysts say that this is the result of an opportunistic rush to gold as the dollar loses its grip as the global reserve currency. They are also looking to diversify their reserves from the dollar.
Other countries, including China, have increased their holdings. But it remains to be seen whether the gold buying will continue.
According to the WGC report, central banks purchased 673 tonnes of gold in September, the largest amount in over five decades. And the report says the figure includes a substantial estimate for gold purchases made by unreported central bankers.
Turkey
Central banks across the globe have been buying gold at the fastest pace since 1967, according to World Gold Council research. In the third quarter of 2018, central banks bought almost 400 tons. The global gold demand climbed to an all time high.
As demand for gold has continued to surge, many analysts are wondering who is behind the massive buying. Some believe that Russia and China are the biggest buyers. Others point to Middle Eastern governments that are using fossil fuel export revenues to buy gold.
Turkey’s central bank has been one of the largest buyers of gold in the world this year. The Central Bank of Turkey repatriated 104 tonnes of gold from the Bank of England last year.
Qatar
If you’ve been watching the gold market over the past few months, you’ve probably heard the financial media run with reports about record central bank gold purchases. The implication is that Middle Eastern nations are taking advantage of higher oil prices to buy gold. But in reality, the World Gold Council’s latest research shows that the global demand for gold has increased at the fastest pace since 1967.
It also reveals a significant number of unreported purchases. Analysts point to Russia and China as the biggest buyers. This means the World Gold Council’s total figure is a substantial estimate.
Central banks in the Middle East are diversifying their foreign exchange reserves. While the US Dollar has continued to strengthen, some are buying gold to avoid the currency’s gradual depreciation.
India
The World Gold Council (WGC) reported that the largest central bank gold purchases in history happened in the third quarter of 2022. Specifically, the WGC calculated that central banks purchased over 400 tonnes of gold during the quarter.
Although the number is significant, a significant amount of that was not actually reported. In fact, only about 14 of the total gold reserve accumulation that the WGC claims was purchased was actually publicly reported.
While there are many factors at play, central banks are buying at the fastest pace since 1967. This includes a livid tempo of buying that has been boosted by the US Fed’s ongoing scaling back of interest rates.
Other indicators of a heightened gold demand include the retail gold patronage, which has jumped from a paltry 46.8 tonnes in Q3 of last year to a staggering 399 tonnes in the most recent three months. These numbers may seem to support the claim of a virtuous cycle.
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