Monday, February 13, 2023

2022 was record year for central bank gold buying, WGC confirms

JPMorgan joins HSBC as vault custodian for top gold ETF 

Two years on from dropping to its lowest level in a decade, central bank demand for gold has rebounded strongly, with net purchases rising by 1,136 tonnes valued at some $70 billion in 2022, the World Gold Council (WGC) said on Tuesday.

Correcting some of the historic data from its annual Gold Demand Trends report, the WGC confirmed that this level of purchase was indeed the most in any year dating back to 1950, and the 13th consecutive year of net inflows.

As disclosed earlier, central bank purchases in the fourth quarter were 417 tonnes, which almost matched the entire 2021 totals (450 tonnes). Like the third quarter, the final quarter of the year was a combination of reported purchases and a substantial estimate for unreported buying.

As a result, total gold buying in the second half of 2022 totalled 862 tonnes.

This data underline a shift in attitudes to gold since the 1990s and 2000s, when central banks, particularly those in Western Europe that own a lot of bullion, sold hundreds of tonnes a year.

Since the financial crisis of 2008-09, European banks have stopped selling (gold), and a growing number of emerging economies such as Russia, Turkey and India have bought.

“This is a continuation of a trend,” said WGC analyst Krishan Gopaul. “You can see those drivers feeding into what happened last year. You had on the geopolitical front and the macroeconomic front a lot of uncertainty and volatility.”

Buying dipped during the coronavirus pandemic but accelerated in the second half of 2022, with central banks purchasing 862 tonnes between July and December, according to the WGC.

Banks including those of Turkey, China, Egypt and Qatar said they bought gold last year. But around two-thirds of the gold bought by central banks last year was not reported publicly, the WGC said.

Banks that have not regularly published information about changes in their gold stockpiles include those in China and Russia.

However, the “central bank buying (in 2023) is unlikely to match 2022 levels,” the WGC added.

“Lower total reserves may constrain the capacity to add to existing allocations. But lagged reporting by some central banks means that we need to apply a high degree of uncertainty to our expectations, predominantly to the upside.”

The central bank purchases took total gold global gold demand last year to 4,741 tonnes, up 18% from 2021 and the highest for any year since 2011.

(With files from Reuters)

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