Central banks have purchased around 800 tonnes of gold during the first three quarters of 2023, according to data from the World Gold Council (WGC). This is a record amount purchased in a total of nine months, as geopolitical concerns pushed central banks to increase allocation to safety assets. Central banks’ healthy appetite for gold is also driven by countries’ desire to weaken their dependence on the US dollar as a reserve currency.
Central banks increased their gold purchases to 337 tons during the third quarter of the year, mainly due to higher purchases from China (+78 tons), Poland (+57 tons), Turkey (+39 tons) and India (+9 tons ). China has been the biggest buyer of gold this year amid an 11-month buying streak. The People’s Bank of China has bought 181 tons this year, bringing gold holdings to 4% of its reserves.
So far this year, net gold purchases by central banks are 14% ahead of 2022. This insatiable appetite has helped gold prices defy rising bond yields and a strong dollar. We believe this trend is likely to continue in the fourth quarter amid tensions in the Middle East.