Gold purchases by central banks are heading for an all-time high

1,082 tonnes. This exceeded the annual gold purchases of the last decade by more than 100 per cent, as these had averaged only 512 tonnes. Now, the first nine months of 2023 give reason to believe that last year’s record will be surpassed, as the central banks’ propensity to buy in the first three quarters even significantly exceeded that of the same period in the previous record year 2022.

800 tonnes additional gold reserves by the end of September 2023

Central banks net-purchased no less than 800 tonnes of gold to strengthen their foreign currency reserves with the precious metal. If the Turkish central bank had not disposed of 132 tonnes of its gold reserves in the first half of 2023, the three-quarter-year balance sheet would have been even more impressive. The reasons for the massive gold sales by the Turkish central bank, which had been one of the strongest gold buyers in previous years, were the high domestic demand for gold and the national restriction on gold imports. The central bank’s gold was therefore primarily sold on the domestic market.

The Turkish central bank has been increasing its gold reserves again since June

Following the presidential elections in Turkey, the country’s central bank resumed its gold purchases and had already reduced its outflows to 70 tonnes by the end of September 2023, which could point to a strong fourth quarter. So far, the central banks of emerging markets have dominated the massive gold purchases this year – above all China, which increased its gold reserves by155 tonnes in the first three quarters alone, according to the World Gold Council. In contrast to industrialised nations such as the US or Germany, where gold accounts for almost 70 per cent of total foreign currency reserves, the average proportion of gold reserves in emerging markets is only around 5 per cent. This could soon change, as according to the World Gold Council’s “2023 Central Bank Gold Reserves Survey”, 62 per cent of the central banks surveyed expect a shift in the weighting of their foreign currency reserves in favour of the precious metal over the next five years.