Central banks around the world expanded their gold reserves for the third consecutive month in August, adding 77 tonnes to their global official reserves during the month — a 38% increase compared to July.
The recent buying wave has positioned central banks on a path of strong gold accumulation, offsetting net gold sales from April and May.
Buying was spearheaded by the People’s Bank of China, which added 29 tonnes to its reserves during the month. China’s purchases this year now stand at 155 tonnes to date, bringing the central bank’s total gold holdings to 2,165 tonnes.
Meanwhile, the National Bank of Poland added a further 18 tonnes of gold to its stockpile in August. Poland is nearing its stated 100-tonne buying target, having bought 88 tonnes, net, so far this year that has boosted its gold reserves to 314 tonnes.
Other buyers for the month included the Central Bank of Turkey, the Central Bank of Uzbekistan, the Reserve Bank of India, the Czech National Bank and the National Bank of the Kyrgyz Republic. The Central Bank of Russia also noted a 3-tonne rise in its reserves.
The Central Bank of Bolivia, however, reportedly "monetised" 17 tonnes of gold between May and August — a 40% decline in its gold reserves. Yet the term "monetise" remains ambiguous until further information becomes available.
Overall, central bank buying is solid and despite initial net sales earlier this year, the robust buying pace suggests a strong annual accumulation. Further insights will be available in the World Gold Council’s next Gold Demand Trends report, slated for publication at the end of October.
Despite the pick up in central bank purchases through to the latest available data for August, the price of gold bullion reached seven month lows in early October as the US recorded its strongest US jobs data in eight months. The jobs figures sent bond prices tumbling and caused a sharp rise in interest rates prompting further outflows of capital from the world's largest gold-backed ETF trust funds.
Following the attack on Israel and an increasing appeal of safe haven assets, spot gold has since lifted off those lows and is currently trading near US$1,850 an ounce.