After three months of net selling, central banks once again became net buyers of gold in June as the central bank of Turkiye again played a pivotal role, according to data from the World Gold Council.
In its latest report, the WGC said six central banks bought gold in June, with only two sellers in the marketplace. Net purchases totaled 55 tonnes, the report said. Along with Turkiye, The People’s Bank of China also dominates the marketplace after buying 21 tonnes of gold in June, extending its buying spree to eight straight months.
“Since it began reporting increases in November 2022, gold reserves have grown by 165t (+8%), of which 103t has been bought in 2023, making it the largest buyer y-t-d,” said Krishan Gopaul, senior analyst at the WGC, in the report.
After three months of selling, Turkiye bought 11 tonnes of gold in June. However, Turkiye has a fairly big hill to climb to get its gold reserves back to where they were at the start of the year. Even after its purchase in June, the central bank has seen its gold holdings drop by 100 tonnes this year.
Turkiye’s central bank was forced to sell its gold to meet domestic demand, as the government has taken steps to curb gold imports to keep its trade deficit under control. Turkiye saw a surge in domestic retail demand as consumers looked to the precious metal to protect themselves from a weakening currency and a significant rise in inflation.
Poland was the third central bank that Gopaul highlighted in his report after it bought 14 tonnes of gold.
“This is the third consecutive month of buying from the bank, which last year indicated that it planned to add 100t to its gold reserves. The NBP has added 48t y-t-d, pushing its total gold holdings to 277t,” Gopaul said.
The other notable buyers in June were Uzbekistan, which purchased 8 tonnes of gold; the Czech Republic saw its gold reserves increase by 3 Tonnes, Qatar bought 2 tonnes of gold, and India bought 1 tonne.
The report said Kazakhstan and Singapore were the only significant sellers in June.
Kazakhstan’s official gold reserves fell by 3 tonnes. Gopaul noted that according to comments from the nation’s central bank, he expects to see more selling through 2023.
Finally, the report said the Monetary Authority of Singapore reduced its gold reserves by 1 tonne during the month. Despite June’s selling pressure, Singapore remains a major gold buyer as its reserves have increased by more than 71 tonnes this year.
June’s central bank purchases align with the broader trend in the marketplace. Last week the WGC said that central bank gold demand in the second quarter totaled 102.9 tonnes, down 39% compared to unprecedented demand reported in the second quarter of 2022.
However, because of record demand in the first quarter, central bank demand in the first half of 2023 hit a record.
“We’ve been saying all along from the beginning of the year that we may not necessarily reach the same levels that we saw in 2022, but that we do expect that sector to remain quite healthy,” said Juan Carlos Artigas, head of research at the WGC in a recent interview with Kitco News.
Although central bank demand is cooling from last year’s unprecedented surge, analysts say that this sector of the market will continue to provide a solid support for prices through the rest of the year.