 | Get all the essential market news and expert opinions in one place with our daily newsletter. Receive a comprehensive recap of the day's top stories directly to your inbox. Sign up here! |
(Kitco News) -
Central banks continued to bolster their reserves with gold purchases in July, according to the latest International Financial Statistics data released by the International Monetary Fund (IMF).
Krishan Gopaul, senior analyst for the World Gold Council, highlighted three central banks’ purchases of precious metals in a series of Twitter posts published Wednesday and Thursday.
“Central Bank of Turkey data shows that its #gold reserves rose by 17 tonnes in July, adding to the 11 tonnes bought in June when it resumed net buying after heavy net selling between March-May,” Gopaul said. “Ytd net sales now total 85 tonnes, with total gold reserves at 457 tonnes.”
He said the Czech National Bank also added 2 tonnes to its gold reserves in July, bringing their year-to-date net buying total to nearly 10 tonnes, which represents almost half of their 21 tonnes of total holdings.
But the biggest purchaser highlighted in the IMF data was the National Bank of Poland, which increased its gold reserves by 22 tonnes last month. “This brings year-to-date net purchases to 71 tonnes, and lifts total gold reserves to 299 tonnes,” Gopaul said.
On Monday, Gopaul shared that China bought 23 tonnes of gold in July, and noted that China has purchased 126 tonnes of gold to date in 2023, increasing its official reserves to 2,136 tonnes.
China's ongoing gold purchases have put renewed focus on the growing de-dollarization trend as nations around the world reduce their exposure to the U.S. dollar. Although China has become a leading buyer in the precious metal market, some analysts say that the central bank is just getting started.
"When you buy gold, it's a direct vote against the U.S. dollar," said Willem Middelkoop, creator of the Commodity Discovery Fund. "China is sending a message to the White House that they don't support the global financial system backed by the U.S. dollar."
Middelkoop said he also expects China to buy gold for an extended period, and that he believes this is the start of the endgame for the U.S. dollar.
"It will take decades, but this is how a new system is started," he said. “I expect China will continue to buy gold for the next decade. We will have a multi-polar currency world for quite a while."
And Russia’s finance ministry announced late last week that it would start buying currencies and gold again in August after 18 months of selling or sitting on the sidelines as Moscow looks to profit from recent high oil prices.
FX purchases were halted in late January 2022, and the program was suspended after the invasion of Ukraine the following month.
The finance ministry said it planned to buy 1.8 billion rubles, or $19.27 million worth of foreign currency, each day from Aug. 7 to Sept. 6, with FX purchases totaling 40.5 billion rubles ($3.78 billion). It did not share a specific target for its gold purchases.
Analysts have said that central bank demand remains a significant support for gold prices even though it has slowed in recent months.
