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(Kitco News) - Central bank gold demand continues to dominate the marketplace, with the National Bank of Poland seeing its gold reserves hit a record high in May.
Wednesday, Krishan Gopaul, senior European, Middle East, and Asian markets analyst at the World Gold Council, reported on Twitter that Poland's central bank bought 19 tonnes of gold last month.
"This follows the 15 tonnes of gold added in April and lifts gold reserves to a new record high of 263 tonnes," he said.
Preliminary data from the National Bank of Poland indicates that official #gold reserves rose by 19 tonnes in May, to 263 tonnes. This follows the 15 tonnes of gold added in April and lifts gold reserves to a new record high of 263 tonnes. pic.twitter.com/omBrjn8bU0
— Krishan Gopaul (@KrishanGopaul) June 21, 2023
Poland's latest announcement comes on the heels of the Reserve Bank of India adding 2 tonnes of gold to its reserves last month. Meanwhile, the Czech National Bank bought 1.8 tonnes of gold, Russia increased its reserves by 3.1 tonnes and Kyrgyz Republic's central bank bought 1.5 tonnes of the precious metal, according to data from the International Monetary Fund.
According to some analysts, the latest numbers reported by the World Gold Council continue to demonstrate that central banks' appetite for gold is nowhere near being sated. Some analysts have noted that central bank demand is providing critical support for gold in a challenging environment as interest rates continue to rise worldwide due to suborn inflation.
Although prices have recently tested support at a two-month low below $1,950 an ounce, analysts have noted the price action suggests the market is seeing a healthy correction in a solid long-term uptrend.
In a recent interview with Kitco News, George Milling-Stanley said that he expects central banks to continue to buy gold as they diversify away from the U.S. dollar.
"Emerging markets central banks have been behind the vast majority of the buying over the past 13 years because, on average, they have more than two-thirds of their reserves in dollar debt and less than 5% of their reserves in gold," he said. "That is an imbalance they regard as dangerous and it's an imbalance that they're doing their best to address."
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| The gold market remains the superior safe haven as the world deals with rising debt, high inflation and recession risks - Crescat Capital's Tavi Costa |
In a recent interview with Kitco News, Tavi Costa, portfolio manager at Crescat Capital, said that central bank demand continues to completely transform the precious metals market, creating solid value for investors.
He also noted shifting geopolitical uncertainty and the broader de-dollarization trend as the biggest factors driving central bank demand.
"What's happening today with central banks buying gold is that re-emphasizes this sort of chess game being played around these de-globalization trends and the need to own neutral assets," he said. "With interest rates around the world moving higher, we are going to see a lot more volatility in foreign exchange markets. In this environment, central banks will need to enhance their reserves over time by owning more precious metals."
In his research, Costa noted that historicallygold represented about 40% of all global reserves; in the early 1980s, gold represented more than 70% of foreign reserves. He said that if central banks' gold holdings returned to historical averages, they would need to buy $3.2 trillion of the precious metal.
