(Kitco News) - While China has played an influential role in the gold market, there appears to be a new leader among central banks that are buying gold.
In a surprise to nobody, the People’s Bank of China continued to buy gold in February, increasing its official reserve by five tonnes, according to Krishan Gopaul, Senior Analyst for EMEA at the World Gold Council.
He noted that China's central bank has increased its reserves by 10 tonnes in the first two months of the year.
However, Gopaul noted that preliminary data from the National Bank of Poland (NBP) shows it increased its official gold reserves by 29 tonnes, the largest monthly purchase since June 2019, when it bought 95 tonnes.
“(YTD)[Year-to-date] net purchases are now 32 tonnes, with total gold holdings at 480 tonnes at the end of the month,” Gopaul said in a social media post.
Last year, the NBP was the leader in the gold space as it increased its gold reserves by 90 tonnes.
While the Czech National Bank has steadily accumulated gold, its purchases last year were a distant second as it added 20 tonnes to its reserves.
The Czech National Bank has continued to increase its gold reserves, buying 1.7 tonnes last month.
“That's the 24th consecutive month of growth in gold holdings, with the overall increase totaling 42.6 tonnes over that two-year period,” said Gopaul.
In an interview with Kitco News, Chantelle Schieven, Head of Research at Capitalight Research, said that she expects central bank demand to continue to support gold, and she sees prices rising to $3,200 an ounce.
She noted that geopolitical uncertainty caused by President Donald Trump’s flip-flopping on tariffs and trade wars will force a lot of central banks to further diversify away from the U.S. dollar.
“The more uncertainty the U.S. creates, the less power the U.S. dollar will have as a reserve currency. Central banks are buying gold because they are looking for some stability in the chaos,” she said.
Although China has significantly slowed its gold purchases in recent months, analysts have said that it still has significant influence in the marketplace because of its potential.
Last year, China stopped buying gold for six months; however, since 2022 China’s gold holdings have grown from 4% of total foreign reserves to 6% and many analysts have said that this is still too low compared to many developed market central banks.
“There is much more room for China to grow its gold holdings when compared to the U.S.'s nearly seventy percent share,” said Bart Melek, Head of Commodity Strategy at TD Securities in a recent note. “China and other central banks may want to protect the purchasing power of their reserves and may want to become less vulnerable to U.S. and EU sanctions as Russia was.”
Melek also expects gold prices to see a new trading range above $3,000, driven in part by solid central bank demand.
While central bankers are net buyers there are some sellers. GoPaul noted that data from Central Bank of Uzbekistan shows its gold reserves fell by 12 tonnes in February. YTD net sales now total 4 tonnes, leaving gold holdings at 379 tonnes at the end of the month.
However, the WGC has noted that as a gold-producer nation, Uzbekistan’s gold reserves are fluid as it sells its domestic production.
