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Central Banks Added Gold at Faster Pace in June

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Central bank gold buying notched up again in June.

Central banks globally added 59 tons of gold to their reserves last month and there were no reported sales, according to the latest data compiled by the World Gold Council.

The Central Bank of Iraq became the latest bank to add a significant amount of gold to its gold reserves this year. The Iraqi bank purchased 34 tons of gold. It was the first increase in gold reserves by the Central Bank of Iraq since a 7-ton buy in 2018. The Iraqi bank now holds 130 tons of gold.

Uzbekistan continued its gold-buying spree with another 8.7-ton purchase. It has added roughly 9 tons of gold to its reserves each of the past three months. Gold reserves account for just over 60% of Uzbek’s total reserves.

Turkey has also been consistently adding gold to its reserves. Last month, the Turkish bank added 7.7 tons of gold to its holdings. The Turkish central bank added 37 tons of gold to its holdings in the first quarter of this year alone. It now owns over 455tons of gold, accounting for nearly 30% of its reserve assets.

In June, the Kazak central bank increased its gold holdings by 4.2 tons. It was the third straight month of purchases after several straight months of sales earlier in the year and going back to 2021.

India bought 3.7 tons of gold last month. Since resuming buying in late 2017, the Reserve Bank of India has purchased over 200 tons of gold. In August 2020, there were reports that the RBI was considering significantly raising its gold reserves.

Other buyers last month included:

  • Bangladesh – 0.1 tons
  • Czech Republic – 0.5 tons
  • Mexico – 0.1 tons
  • Mongolia – 0.1 tons

Last month, Incoming CNB Governor Ales Michl said he plans to increase the bank’s gold holdings nearly 10-fold.

Central bank net purchases for Q2 stand at 180 tons. That pushed the H1 total to 270 tons. Net purchases through the first half of the year fell in line with the five-year H1 average of 266 tons.

“This is a continuation of the strong buying that we saw last year and we now expect full-year central bank demand for 2022 to be on a par with 2021 levels,” a World Gold Council report said.

Central banks added 463 tons of gold to global reserves in 2021. That was 82% higher than 2020.

A WGC survey found that “gold’s performance during a time of crisis and its role as a long-term store of value/inflation hedge are key determinants in the decisions of central banks to hold it.”

Last year was the 12th consecutive year of net purchases. Over that time, central banks have bought a net total of 5,692 tons of gold.

After record years in 2018 and 2019, central bank gold-buying slowed in 2020 with net purchases totaling about 273 tons. The lower rate of purchases in 2020 was expected given the strength of central bank buying both in 2018 and 2019. The economic chaos caused by the coronavirus pandemic has also impacted the market.

Central bank demand came in at 650.3 tons in 2019. That was the second-highest level of annual purchases for 50 years, just slightly below the 2018 net purchases of 656.2 tons. According to the WGC, 2018 marked the highest level of annual net central bank gold purchases since the suspension of dollar convertibility into gold in 1971, and the second-highest annual total on record.

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