Gold rush of central banks scales record buying of 387 tonnes in H1 of 2023

The second biggest buyer of gold after China was The Monetary Authority of Singapore adding 73 tonnes, followed by the National Bank of Poland, which bought 48 tonnes.

Central banks turned out to be the record buyers of gold in the first half of this calendar year. Although some slowdown in the buying binge was seen in the April-June period, a report by the World Gold Council says that the strong first quarter had set the tone for the six months.

Central banks picked up gold worth 387 tonnes between January and June 2023, while global net purchases totalled 103 tonnes during April to June, a drop of 64 percent on-quarter and 35 percent on-year.

The overall gold demand (excluding OTC), however, dropped 6 percent, largely because of modest outflows from gold ETFs this year as against a strong surge of inflows in early 2022. "Total demand in H1 (inclusive of OTC and stock flows) increased 5 percent to 2,460 tonnes," the WGC report said.

"Buying activity remains widespread and distributed among both emerging and developed countries," it added.

The weakness seen in the second quarter in central banks' gold buying was largely because the Central Bank of Turkey (TCMB) became a net seller amid tight local market conditions.

"The TCMB sold gold into the local market in response to very tight conditions following a temporary, partial ban on bullion imports at a time of economic and political uncertainty resulting in very strong domestic gold demand," the report said.

Major buyers and sellers

Turkey remained the major seller at the end of the first half with reserves falling by a net 102 tonnes year-to-date. There are seven more central banks that reported a decline in their gold reserves at the end of H1, including Kazakhstan (38 tonnes), Uzbekistan (19 tonnes), Cambodia (10 tonnes), Russia (3 tonnes), Germany (2 tonnes), Croatia (2 tonnes) and Tajikistan (1 tonnes).

Around nine central banks were net purchasers during the first half of 2023. The People’s Bank of China was the biggest buyer in H1 reporting an addition of 103 tonnes. China's gold buying continued for eight straight months at the end of H1. Its gold reserves totalled 2,113 tonnes (4 percent of total reserves) at the end of June.

The second biggest buyer after China was The Monetary Authority of Singapore, which picked up 73 tonnes, followed by the National Bank of Poland, which bought 48 tonnes.

India ranked among the six other buyers with relatively smaller purchases. It added 10 tonnes of gold at the end of H1. Others include the Czech Republic (8 tonnes), the Philippines (4 tonnes), Iraq (2 tonnes), the European Central Bank (2 tonnes) and Qatar (2 tonnes).