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3 Feb, 2023 11:01

Central bank gold buying soars to 55-year high

Overall demand in 2022 was the highest in over a decade, the World Gold Council has said
Central bank gold buying soars to 55-year high

Gold purchases soared by 18% in 2022 against the previous year with demand hitting nearly five metric tons, the most since 2011, the World Gold Council (WGC) said on Tuesday. The uptrend comes on the heels of significant declines during the Covid-19 pandemic.

The WGC also said that global central banks increased gold buying in the second half of the year, adding a staggering 1,136 tons of the metal worth some $70 billion to their stockpiles, up from only 450 tons the year before. This took annual buying in the sector to the highest volume since 1967.

According to WGC senior analyst Krishan Gopaul, much of the central banks’ purchases were spurred by the fact that bullion is seen as a more secure asset in turbulent times, expected to hold its value despite geopolitical changes, unlike the more volatile fiat currencies and bonds.

In our central bank survey, what we were told as reasons to hold gold was its performance in times of crisis, that it's an effective diversifier and there's no counterparty risk. If you look at last year, both the geopolitical and macroeconomic environment, you'll see that all of those factors as well as being a reason to own gold could be seen as reasons to buy more gold,” he noted.

Most central bank buying came from emerging markets, including China, Türkiye and Egypt, which traditionally hold lower bullion volumes than Western banks, Gopaul said. However, “for Western central banks, who haven't been buying, because they already own a lot of gold, the key point is they're actually not selling,” he added.

The WGS also noted that nearly two-thirds of the gold bought by central banks last year was not reported publicly.

For more stories on economy & finance visit RT's business section

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