Central banks sell 6 tonnes of gold in February
In a report published Tuesday, the WGC said that on balance, six tonnes of gold flowed out of official reserves in February as activity was dominated but just a few central banks.
"Despite a cumulative decline of 18t y-t-d, global gold reserves remain above 35,600t – their highest level since 1990," the analysts said in the report.
The WGC said that Uzbekistan was the largest seller in February. It decreased its gold reserves by 22 tonnes to 339 tonnes – the lowest level of gold holdings since December 2020. However, the WGC said that the precious metal still represents a significant portion of the central bank's reserves.
"Even after the sale in February, gold reserves still account for 59% of total reserves," the analysts said.
Other central bank sellers included Kazakhstan, which sold another 5 tonnes in February, following a 17-tonne sale in January. Qatar sold 6 tonnes of gold in February, Mongolia sold one tonne and Germany sold one tonne; however, the WGC speculated that Germany's sale was related to coin-minting.
The report said that Turkey dominated the market on the buy side, adding 25 tonnes to its gold reserves in February. The WGC said that Turkey has increased its gold reserves by 35 tonnes so far this year, representing 27% of total reserves. At the same time, India bought 2.6 tonnes of gold in February, taking its total gold holdings to 758 tonnes. Meanwhile, Ireland, the only active developed market buyer, added one tonne of gold to its reserves.
|U.S. Mint sees strongest gold bullion demand in 23 years, sells 426k ounces in Q1|
Although central banks have been net sellers of gold in the first two months of 2022, analysts at WGC have said that they expect central banks to ultimately be net buyers of gold.
According to many economists and market analysts, there is a new focus on central bank reserves. Russia's war with Ukraine has created significant geopolitical uncertainty, which has some nations questioning the U.S. dollar's role as the world's reserve currency.
Many analysts have said that long-term gold remains an attractive asset for central banks looking to diversify away from the U.S. dollar. However, some economists have said that it will take decades before the U.S. dollar loses its dominant status as it currently represents about 60% of global reserves.