Gold Demand Trends Q1 2023
Central banks
5 May, 2023
Central bank demand makes a record-breaking start to 2023.
- Central bank demand hit 228t in Q1, 34% higher than the previous Q1 record, set in 2013
- This follows the record annual demand of 1,078t in 2022
- Buying during the quarter was reported by both emerging and developed market banks.
| Tonnes | Q1'22 | Q1'23 | YoY % change | |
|---|---|---|---|---|
| Central banks & others | 82.7 | 228.4 |  | 176 |
Source: Metals Focus, World Gold Council
Central bank gold buying made a blistering start to 2023. Q1 demand reached 228t. While lower than the figures seen in the previous two quarters this is nonetheless the strongest first quarter on record.1
This is all the more impressive considering it follows the record-breaking pace of demand last year. The rolling four-quarter total jumped significantly to 1,224t in Q1 following massive buying in recent quarters. As with the figures for both Q3 and Q4 2022, data for the current quarter contains a significant estimate for unreported activity.
Four central banks accounted for the majority of reported purchasing during Q1.2 The Monetary Authority of Singapore (MAS) was the largest single buyer during the quarter. The addition of 69t, the first increase in its gold reserves since June 2021, confirms that buying in Q1 was not only the domain of emerging market central banks. Gold reserves at MAS now total 222t, 45% higher than at the end of 2022.
The People’s Bank of China (PBoC), disclosed that its gold reserves had risen by 58t. Since recommencing reports of purchases in November 2022, the PBoC has added 120t to its gold reserves, lifting them to 2,068t (4% of total reported gold reserves).
Turkey was again a big buyer of gold during the quarter: official reserves rose by 30t. Combined purchases of 45t in January and February were offset by a sale in March – the first since November 2021.3 15t of gold was sold into the local market following a temporary partial ban on gold bullion imports.4 Overall, this lifted total gold reserves to 572t (34% of total reserves).
The Reserve Bank of India also added a modest 7t in Q1, lifting its gold reserves to 795t, while the Czech Republic (2t) and the Philippines (1t) were also notable buyers.
A significant update during Q1 came from the Central Bank of Russia in a resumption of its reporting of gold reserves, back filling data from the end of January 2022 to date. We can now see that in Q1 Russia’s official gold reserves fell by 6t, to 2,327t (25% of total reserves). However, even with this decline – possibly related to coin-minting – the country’s gold reserves are 28t higher than when it stopped reporting last year. Our historical series has been updated to reflect this, along with new information from other central banks...
Selling was again much more modest by comparison. The Central Bank of Uzbekistan (-15t) and the National Bank of Kazakhstan (-20t) were the largest sellers of gold during the quarter. As we have noted previously, it is not uncommon for central banks that purchase gold from domestic sources – as both Uzbekistan and Kazakhstan do – to be frequent sellers of gold. Cambodia (-10t), UAE (-1t) and Tajikistan (-1t) were the other notable sellers. Croatia reported a 2t reduction in its gold holdings in January but this was a transfer to the European Central Bank – which is required of all countries joining the euro area – and, as such, it does not represent a decline in the global universe of official sector gold.
Gold is going to be record costly and de-dollarization is the reason
Dedollarisation is picking up quick and fast; the Ukraine war has fueled the speed of countries moving away from the American dollar, to circumvent Western sanctions
"The greenback is losing favour with a whole bunch of nations that are the better growing economies of the world given the duress that the Russian invasion of Ukraine has put the global economic order under.
- De-dollarisation is picking up quick and fast; the Ukraine war has fueled the speed of countries moving away from the American dollar, to circumvent Western sanctions.
- The consequence has been a gold rush. Global central banks are making a run for gold, the demand for which reached record high in 2022. This demand is expected to continue at a healthy rate in the near future too.
- This is the highest ever in history. It is more than double the amount purchased in 2021.
- Reports added that based on this demand pattern, global central banks are expected to buy 700 metric tons in 2024. This is not the same as 2022, yet more than the rough yearly average of 500 tons. In 2021 450 tons of gold was bought by central banks.
Since the US-led Western nations put Russia in an acute economic pinch using the dollar—the American dollar remains the mainstay of global forex reserves—the only viable way in front of countries such as India, China, Russia and those in their sphere of influence was to undermine the power of the American dollar.
The obvious choice is gold..."
De-Dollarization: China's state-owned banks cut interest rates on dollar deposits to boost forex trade in yuan
In China, interest rates offered by the banks on dollar deposits of $50,000 and above have been capped at 4.3 per cent
China stretched its gold-buying spree into the 7th straight month in May, signaling more central bank de-dollarization
- China extended a gold-buying streak through May, adding an additional 16 tons.
- It's not alone in boosting its gold holdings, as central banks shed dollar reserves.
- China's foreign currency holdings fell in May to $3.18 trillion.
No comments:
Post a Comment