(Kitco News) - Official sector gold demand continues to play a dominant role in the marketplace, supporting prices near record highs. At the same time, it's not just emerging market central banks that are trying to protect the value of their currencies.
In a social media post, Krishan Gopaul, Senior Analyst for EMEA at the World Gold Council, highlighted reserve data from the International Monetary Fund (IMF) showing that Taiwan's central bank increased its official gold reserves in October. According to the data, the Central Bank of the Republic of China (Taiwan)’s gold holdings rose to 424 tonnes three months ago.
“That’s an instance of an advanced economy (per IMF classification) adding to its gold reserves,” he said in the post.
Gopaul also noted in another post on Sunday that the State Oil Fund of Azerbaijan bought 20 tonnes of gold in the final quarter of 2024, bringing its full-year 2024 gold purchases to 45 tonnes.
“Total gold holdings were 147 tonnes at the end of 2024, accounting for 21% of its investment portfolio (vs. 12% at end-2023),” Gopaul said.
Although the gold market has seen significant volatility in the last few months, analysts have said that central bank demand will continue to support the precious metal's broad uptrend.
Joy Yang, Global Head of Index Product Management at MarketVector Indexes, said that with so much geopolitical uncertainty generated by President Donald Trump and his new America-First economic policies, it’s not surprising to see central banks investing in a more neutral asset.
This past weekend, Trump initiated a trade war with Canada and China and threatened to hit the European Union with similar trade tariffs. On Monday, to further complicate the economic landscape, Trump delayed impending tariffs with Mexico for a month.
Yang said that these threats from the Trump administration will only make gold more attractive to nations that want to hedge against uncertainty and limit their exposure to the U.S. dollar and treasuries.
Kathy Kriskey, Commodity Strategist at Invesco, said that central bank demand continues to create value for retail investors, adding that she does not expect central bank demand to be sated anytime soon. She used China’s central bank as a prime example.
The People’s Bank of China bought gold for 18 consecutive months, then halted purchases in mid-2024 for six months, only to re-enter the market at the end of the year.
“China's reserves are only five percent in gold, so that gives me a lot of hope that China's going to continue to buy, especially with these battles with Trump. They need to de-dollarize,” she said. “So China especially, but the other central banks too, they're providing an important floor for gold.”
