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Feb 23 - 12:55 AM

ANZ: Central Banks' Gold Buying Trends

By eFXdata  —  Feb 22 - 04:30 PM

Synopsis:

ANZ outlines the significant shift in gold buying patterns among central banks, highlighting a move from developed market (DM) central banks being net sellers to a stabilization of holdings, and emerging market (EM) central banks significantly increasing their gold reserves.

Key Points:

  • DM Central Banks: Holding 57% of global official gold reserves, these banks transitioned from net sellers (offloading about 3,687 tons between 2000-2010) to stabilizing or increasing their gold holdings post-2010.
  • EM Central Banks: Now account for 30% of global official gold reserves, up from 19.7% before 2010, with notable buying spurts in 2015, 2018, and 2022.
  • Top EM Buyers: Russia, China, and Turkey lead, collectively adding 3,289 tons (62% of total purchases) since 2010. India, Uzbekistan, Kazakhstan, Poland, Thailand, and Iraq are also prominent buyers.
  • Russia's Buying Spree: Accelerated gold purchases in 2014 in response to sanctions, increasing gold's share in its reserves from 9% to 26% by the end of 2023, mostly between 2014-2019.
  • China's Gold Strategy: The People’s Bank of China (PBoC) embarked on sporadic gold-buying sprees over the last decade, with a notable uptick during the US-China trade war in early 2018 and continued buying since late-2022, taking its holdings to 2,235 tons by end-2023, which is 4.3% of its total reserves.
  • EM Central Banks' Gold Share: The share of gold in the foreign reserve holdings of EM central banks has been rising, notably after 2018, reaching 7.3%, nearly doubling over the last decade.

Conclusion:

The strategic shift towards gold among central banks, especially within EMs, signifies a diversification of foreign reserves and a hedge against geopolitical risks and economic uncertainties. This trend underscores gold's appeal relative to other reserve assets, particularly in light of recent global economic shocks and elevated geopolitical tensions.

Source:
ANZ Research/Market Commentary

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