Jakarta, CNBC Indonesia – Buyer it’s not most in the world are not rich people, but the central banks of various countries. This can be seen from the data released by the World Gold Council (WGC).
WGC said central banks added 1,136 tonnes of gold worth about US$70 billion to their reserves in 2022. This was the largest purchase of gold since 1967.
“This is a continuation of a trend,” said WGC analyst Krishan Gopaul, citing ReutersTuesday (31/1/2023).
“You can see those drivers are contributing to what happened last year. You have a lot of uncertainty and volatility on the geopolitical and macroeconomic front,” he stressed.
The data released shows a shift in attitudes towards gold since the 1990s and 2000s. When central banks, particularly in Western Europe where bullion is abundant, sell hundreds of tonnes per year.
Since the 2008-2009 financial crisis, European banks stopped selling gold. In contrast, developing countries such as Russia, Turkey and India are buying more and more gold.
Central banks like gold because it is expected to retain its value through difficult times. Unlike currency and bonds, gold is not dependent on any issuer or government.
Gold also allows central banks to diversify from assets. Like from US Treasuries and dollar currency.
Purchases of gold fell briefly during the coronavirus pandemic but picked up in the second half of 2022. According to the WGC, the central bank purchased 862 tons of gold between July and December, according to the WGC.
Most buying central bank?
Central banks that buy a lot of gold come from Turkey, China, Egypt and Qatar. The central banks of these countries said they had bought gold last year.
However, WGC data says, about two-thirds of the gold purchased by central banks last year was not reported to the public. Banks that have not regularly published information about changes in their gold stocks include those from China and Russia.
“Central bank buying (in 2023) is unlikely to match 2022 levels,” the WGC said.
“Lower total reserves may limit the capacity to add to existing allocations. But delays in reporting by some central banks means that we need to apply a high degree of uncertainty to our expectations, particularly upwards,” he said.
Central bank purchases brought total global gold demand last year to 4,741 tons. This is up 18% from 2021 and the highest for any year since 2011.
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(sef/sef)
