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Poland boosts its gold reserves by 15 tonnes, biggest increase in nearly 3 years

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(Kitco News) Polish central bank bought 14.8 tonnes of gold in April, which was the biggest purchase since June 2019.

According to the National Bank of Poland, the country's gold reserves rose to 7.828 million fine troy ounces (243.5 metric tonnes) last month from 7.352 million. This was the largest increase since June 2019, when Poland's reserves rose by 94.9 tonnes.

The value of gold, including gold deposits and gold swapped, climbed to $15.52 billion in April from $14.55 billion.

The April purchase also comes after the Bank's Governor Adam Glapinski's said in 2021 that Poland was planning to add 100 tonnes to its gold holdings to prepare for "the most unfavorable circumstances."

"Why does the central bank own gold? Because gold will retain its value even when someone cuts off the power to the global financial system," Glapinski told local newspaper. "Of course, we do not assume that this will happen. But as the saying goes - forewarned is always insured. And the central bank is required to be prepared for even the most unfavorable circumstances. That is why we see a special place for gold in our foreign exchange management process."

This means that more buying could follow, said BMO Capital Markets managing director Colin Hamilton. "We expect central bank buying to remain robust this year (+596t), an ongoing tailwind for gold prices and sentiment," Hamilton said.

Central bank gold buying has been one of the driving forces behind higher gold prices this year.

According to the World Gold Council, other central banks that bought gold in April included the People's Bank of China, the Czech National Bank, and the Central Bank of Mongolia, with 8.1 tonnes, 1.8 tonnes, and 1 tonne, respectively.

On the other hand, the Central Bank of Turkey is estimated to have sold a staggering 80.8 tons of gold in April to meet surging domestic demand. After buying the most gold than any other central bank last year, Turkey turned to selling in March and April to meet growing domestic demand, the WGC said. This was in an attempt to limit the need to import gold, which has been weighing on Turkey's current account deficit.

Turkey has seen a surge in gold demand as citizens embraced the precious metal as a hedge against inflation, which ran at a pace of over 85% at one point last year, and local currency devaluation.

To get the latest WGC numbers on central bank gold buying from the first quarter, click here.

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