Krishan Gopaul, a senior analyst at the World Gold Council, reported that central banks saw a significant net gain in gold reserves in April, as sovereign gold sales came to a halt. Despite gross gold purchases being similar to those in March, the lack of selling made a big difference.
“The rapid rise in gold prices in March raised some questions,” Gopaul said in the latest report. “One key question was whether central banks, who have been a major factor in the recent rally, would change their gold buying behavior.”
Gopaul explained that more detailed data from March, along with initial numbers from April, show that central banks are still keen on buying gold. “Recent figures from the IMF and other public sources show that global gold reserves increased by a net 33 tonnes in April, similar to the 27 tonnes seen in February. Although gross purchases dipped to 36 tonnes from 39 tonnes in March, gross sales saw a significant drop from 36 tonnes to just 3 tonnes in April.”
In April, eight central banks increased their gold reserves by at least one tonne. “The Central Bank of Turkey was the biggest buyer, adding 8 tonnes to its official reserves,” Gopaul noted. “Turkey has now been buying gold for 11 straight months, bringing its year-to-date net purchases to 38 tonnes and its total gold holdings to 578 tonnes.”
Other major buyers in April included the National Bank of Kazakhstan (6 tonnes), the Reserve Bank of India (6 tonnes), the National Bank of Poland (5 tonnes), the Monetary Authority of Singapore (4 tonnes), the Central Bank of Russia (3 tonnes), and the Czech National Bank (2 tonnes).
Interestingly, there was a slowdown in gold buying by the People’s Bank of China. “They added just under 2 tonnes to their reserves in April, the smallest increase since they started reporting again in November 2022, and much lower than their usual monthly average of 18 tonnes,” Gopaul noted.
The only significant gold sales in April were by the Central Banks of Uzbekistan and Jordan, each reducing their reserves by 1 tonne, which is much less than their selling pace in February and March.
March also saw some revisions. “Net purchases for March were revised to just 3 tonnes after the Central Bank of the Philippines reported a late sale of 12 tonnes,” Gopaul said. “While gross purchases in March stayed stable despite rising gold prices, gross sales increased significantly due to heavy sales from Uzbekistan (11 tonnes), Thailand (10 tonnes), and Jordan (4 tonnes).”
“This suggests that some central banks’ gold buying activity might be influenced by price changes,” Gopaul added.
He concluded by saying that preliminary data from April suggests that March might have been an exception, with central banks possibly continuing their gold buying plans despite high prices. “We’ll need more data from April and May to better understand central banks’ gold buying strategies. Plus, our Central Bank Gold Survey 2024 coming out in June will give us deeper insights into their views on gold and future buying trends.”
