Central Banks Continue to Scoop Up Gold in 2023

(Kitco News) After a record-setting year in 2022, central banks remain very interested in gold at the start of 2023, according to the World Gold Council (WGC). In January, central banks bought 31 tonnes of gold, a monthly increase of 16%, said WGC in a note Thursday.

Most of the buying was done by three central banks, and they are not new players — Turkey, China, and Kazakhstan. Turkey was the largest official gold buyer in 2022, and China is known to have aggressively stepped up its gold purchases towards the end of last year.

Kicking off the first month of the year, Turkey bought 23 tonnes of gold, bringing its total gold reserves to 565 tonnes. China purchased 15 tonnes of gold in January on top of the 62 tonnes reported in November and December. This brought China's total gold reserves to 2,025 tonnes. Kazakhstan's central bank added four tonnes of gold, bringing the total reserves to 356 tonnes. The European Central Bank (ECB) had a unique addition of two tonnes of gold. But the uptick was due to Croatia joining the currency union, which requires that a new member-country transfers some amount of gold to the ECB as part of a larger transfer of reserve assets, the WGC noted. To do the transfer, Croatia bought the two tonnes in December. One central bank decided to go in another direction. Uzbekistan's central bank sold 12 tonnes of gold in January. Its gold reserves are now at 384 tonnes, which is 66% of its total reserves.

In January, gold rose from $1,860 an ounce to a peak of around $1,960 an ounce. At the time of writing, April Comex gold futures were trading at $1,842.30, down 0.17% on the day. The WGC views this increase in central banks' appetite as remaining strong throughout this year.

"We see little reason to doubt that central banks will remain positive towards gold and continue to be net purchasers in 2023," the report said. "The healthy January data we have so far gives us little reason, at this time at least, to deviate from this outlook."

Last year, central banks purchased 1,136 tonnes — the most on record and a more than 150% increase from last year.

"Geopolitical uncertainty and high inflation were highlighted as key reasons for holding gold," the WGC said in its Gold Demand Trends report. The Central Bank of Turkey bought the most gold out of all central banks as it searched for protection against unchecked inflation. In the fall, Turkey's inflation accelerated to 85% before slowing to 64% in December. China was also the big highlight last year, as the People's Bank of China (PBoC) resumed gold buying for the first time since 2019.