August Central Bank Gold Demand Slows Due to High Prices
The latest data from the World Gold Council (WGC) shows that the net purchase reported by central banks is far below the recent trend in August, and high gold prices may suppress demand, but the lack of a significant increase in sales indicates that sovereign buying is just a pause.
Marissa Salim, Senior Research Director for Asia Pacific at the World Gold Council (WGC), wrote in her latest monthly report: "Central banks continued to accumulate gold in August, reporting a net purchase of 8 tons." "Although overall demand has gradually decreased from the high point at the beginning of 2024, the accumulation of gold reserves is still positive, with activities concentrated in emerging market (EM) central banks."
Salim pointed out that the net purchase in August was the lowest level since 2 tons in March, and also far below the 12-month average of 33 tons.
She said: "On a year-over-year basis, emerging market central banks accounted for 70% of the total reported net purchase, and Turkey accounted for 25% of the total central bank purchases so far."
Country-level data shows that only four central banks added one ton or more of gold to their net reserves in August. The National Bank of Poland was the largest buyer, with a net increase of 6 tons of gold, bringing its gold holdings to 398 tons. Salim said: "Poland has continued to maintain a net purchase trajectory in the past five months, adding 39 tons during this period."
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The Central Bank of Turkey increased its gold reserves by 3 tons in August, marking 15 consecutive months of net purchases. She noted: "On an annual-day basis, Turkey is the largest net purchaser, adding 52 tons of gold, accounting for about 35% of its total reserves."
The Reserve Bank of India also made a net purchase of 3 tons of gold for the eighth consecutive month. Salim said: "This makes the Reserve Bank of India the second-largest net purchaser of gold on a year-over-year basis, with a net purchase of 45 tons."
The Czech National Bank (CNB) increased its gold reserves by 2 tons in August, bringing its net purchase for several consecutive months to 18 tons. She said: "During this period, the People's Bank of China accumulated 33 tons of gold, bringing its total gold reserves to 45 tons."
The National Bank of Kazakhstan was the largest net seller in August, with a reduction of 5 tons in gold reserves. Salim noted: "Net sales for the fourth consecutive month brought its gold holdings to 290 tons, accounting for about 55% of the total reserves." "Kazakhstan is now a net seller, with gold holdings reduced by 5 tons."
Overall, the central bank activities reported in August were significantly lower than the frenetic pace of the past two years, prompting Salim to suggest that the historical highest price of gold may have affected sovereign demand.She said: "Although the performance of gold prices is not the primary strategic driver for central bank purchases, its continued upward trend may affect deceleration." "However, it is worth noting that sales volumes have not increased, which may indicate a wait-and-see attitude rather than a change in trend. In particular, all other key drivers of central bank decision-making, such as the demand for effective diversification of investments and the performance of gold during times of risk, still exist."
"Overall, our expectations for the rest of this year remain positive," Salim concluded, then reiterated that the final number "may be lower than last year's total."
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