(Kitco News) - Gold is once again at the center of global financial strategy—not just for central banks, but for sovereign wealth funds looking to hedge risks and preserve value.
Krishan Gopaul, Senior Analyst for EMEA at the World Gold Council, reported in a social media post on Wednesday that the State Oil Fund of the Republic of Azerbaijan (SOFAZ) bought 16 tonnes of gold during the second quarter.
“This lifts its total H1 net purchases to 35 tonnes and total gold holdings to 181 tonnes (almost 29% of its total portfolio),” he said.
According to its investment policy, the sovereign wealth fund has reached its maximum allowable position in the precious metal.
SOFAZ has been extremely active in the gold market, with its purchases outpacing most central bank activity so far this year.
Only Poland has bought more gold in the first half of the year than SOFAZ, increasing its official reserves by 67.2 tonnes as of May.
While the People’s Bank of China has been actively buying gold for nine consecutive months, its purchases in the first half of the year totaled 16.9 tonnes as of May.
Among other notable buyers in the first half of the year, the Central Bank of the Republic of Turkey bought 14.9 tonnes of gold, Kazakhstan increased its official gold reserves by 14.7 tonnes, the Czech Republic’s central bank purchased 9.2 tonnes, and the Reserve Bank of India added 3.42 tonnes to its holdings.
Analysts see sustained central bank buying as a powerful floor under gold prices, reinforcing the metal’s strategic appeal amid macroeconomic uncertainty. Official sector demand is expected to keep prices supported above $3,000 an ounce.
Even as gold prices continue to consolidate at these elevated levels, surveys released last month show that central banks are expected to add to their gold reserves over the next 12 months.
The World Gold Council said in June that its Annual Central Bank Gold Survey showed that 95% of respondents expect global gold reserves to increase over the next 12 months. Additionally, 43% of central bank reserve managers indicated they plan to increase their own official gold holdings this year, up from 29% in last year’s survey.
According to another survey published in June by the Official Monetary and Financial Institutions Forum (OMFIF), 32% of central banks plan to increase their exposure to gold in the next 12 to 24 months—the highest level of conviction seen in the last five years.
Analysts expect central banks to buy another 1,000 tonnes of gold this year, a level reached each of the past three years.
