(Kitco News0 - Central Bank gold demand continues to dominate the marketplace even as the pace of purchase slows.
According to the latest data from the World Gold Council, global central banks' gold reserves increased by 19 tonnes last month. However, purchases were down 58% compared to January as some central banks also increased their gold sales.
However, looking beyond the headline figures, Krishan Gopaul, senior market analyst at the WGC, said that central bank gold demand remains healthy in the early months of 2024.
“On a y-t-d basis, central banks report the addition of 64t over January and February, 43% lower than the same period in 2023 but a fourfold increase on 2022,” he said in the report. “Despite slower demand from central banks in February, the year has got off to a healthy start and the broad trend of gold buying remains intact.”
The WGC noted that the People’s Bank of China continues to dominate the gold market, as it bought 12 tonnes of gold in February.
“Including February, PBoC’s gold reserves have grown for 16 consecutive months, although gold’s share of total reserves remains around 4%,” Gopaul said.
Many analysts expect that China will continue to buy gold as it looks to diversify its holdings away from the U.S. dollar.
While Chinese central bank demand garners significant attention in the marketplace, the WGC highlighted other important trends. China isn’t the only consistent gold buyer.
The Czech National Bank increased its gold reserves by 2 tonnes in February, extending its shopping spree to 12 consecutive months.
“Over that period Czech buying has totaled almost 22t, lifting gold holdings to 34t, 183% higher than at the end of February 2023,” Gopaul said.
The Monetary Authority of Singapore bought 2 tonnes of gold in February, its first increase in reserves since September.
Other notable buyers include the National Bank of Kazakhstan, which increased its gold reserves by 6 tonnes. The Reserve Bank of India also bought 6 tonnes of gold in February.
The World Gold Council said the latest reserve data shows only two major gold sellers. The Central Bank of Uzbekistan sold 12 tonnes of gold in February, while the Central Bank of Jordan saw its reserves fall by 4 tonnes.
Although central bank gold purchases slowed materially, analysts expect that demand will not go away anytime soon, providing material support for the market.
Some analysts have said that central bank gold purchases are a major factor behind gold’s latest run above $2,300 an ounce.
