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In March, central banks of various countries purchased 16 tons of gold, and sovereign wealth funds also joined in the gold purchase.

2024-05-07

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Central bank demand continues to transform the gold market, with official sector purchases increasing by a net 16 tons in March, according to the latest data from the World Gold Council.

The updated monthly buying data comes less than a week after the World Gold Council released its report on gold demand trends for the first quarter. The report showed that central banks purchased 290 tons of gold in the first quarter, marking the strongest start to the year on record.

It’s not just central banks participating in gold action. The World Gold Council noted that the State Oil Fund of the Republic of Azerbaijan purchases 3 tons of gold annually. WGC research director Juan Carlos Artigas said in an interview last week that although demand from sovereign wealth funds is relatively low, it represents a new source of official demand.

Artigas said, “Governments, central banks and official institutions are not just buying gold for monetary purposes. This is consistent with the trend we have seen over the past 10 years. Gold has proven to be a very powerful diversification tool. , which is a key reason why central banks use us as one of the reasons to hold gold.”

Artigas pointed out that sovereign wealth funds do not have to report their gold holdings in the same way that central banks report to the International Monetary Fund. At the same time, central banks themselves are not obliged to report their gold holdings.

While central banks are not as sensitive to gold prices as consumers, Artigas said record gold prices could affect gold purchases this year. However, he added that there were no signs yet that the central bank's appetite had been satisfied.

"When the only reserve currency is the U.S. dollar, that sometimes creates constraints for some trading partners," Artigas said. "When you have foreign exchange reserves, like gold, it doesn't have any counterparty risk, which can provide a sense of trust." Sense. It would be very beneficial for these countries to hold some gold.”

The latest data shows that although a major Asian country has been buying gold aggressively for 17 consecutive months, the volume of purchases has slowed slightly. The country dominated the gold market last year, leading in central bank purchases; however, Turkey was the largest gold buyer in March, adding 14 tonnes to its reserves.

In March this year, the Asian giant purchased 5 tons of gold, and the Reserve Bank of India also increased its official gold reserves by 5 tons.

At the same time, Kazakhstan, together with the Monetary Authority of Singapore, increased its gold reserves by 4 tons. World Gold Council market analyst Krishan Gopaul noted in a monthly report that the Monetary Authority of Singapore is the only central bank to increase gold reserves in developed markets.

He said: "The buying momentum will continue into 2024, and emerging market banks will be the main driver of buying and selling."

The Central Bank of Russia purchased 3 tons of gold in March. Reserves in the Czech Republic and the Kyrgyz Republic increased by 1 ton each.

With central banks selling gold, Uzbekistan’s gold reserves fell by 11 tons. However, Gopaul noted in previous reports that Uzbekistan's reserves can be quite volatile because it purchases gold domestically.

Thailand was another major seller in March, with its gold reserves falling by 10 tons. However, this could be the result of accounting changes rather than a major sell-off.

"This involves an adjustment to only report gold with a purity of at least 995/1000. This does not affect the amount of gold held as a net foreign asset and reported in the BOT's financial statements," the report said.

Finally, the Central Bank of Jordan sold 4 tons of gold in March.

The above information is provided by special analysts and is for reference only. CM Trade does not guarantee the accuracy, timeliness and completeness of the information content, so you should not place too much reliance on the information provided. CM Trade is not a company that provides financial advice, and only provides services of the nature of execution of orders. Readers are advised to seek relevant investment advice on their own. Please see our full disclaimer.

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In March, central banks of various countries purchased 16 tons of gold, and sovereign wealth funds also joined in the gold purchase.

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