Demand for gold among central banks increased in July despite the metal reaching all-time highs, as reported by the World Gold Council. This rise indicates a continued interest in gold as a valuable asset within the central banking sector. Central banks added a net 37 tonnes of gold to their holdings, marking the highest increase since January when there was a 45-ton jump.
Leading Purchases
The National Bank of Poland led the way in purchases in July, followed by the banks of Uzbekistan and India. Poland’s consistent buying spree since April has resulted in accumulating 33 tonnes over the last four months, showcasing a strategic approach to diversifying reserves.
Breaking down the purchases
In total, seven central banks increased their gold reserves in July, while only one reduced its holdings. Poland’s purchase boosted its total gold holdings to 392 tonnes, amounting to 15% of the country’s total reserves. Similarly, the Reserve Bank of India added 43 tonnes to its reserves, maintaining its streak of monthly purchases throughout 2024, with a total reserve of 846 tonnes. Kazakhstan, however, was the sole net seller in July, offloading 4 tonnes and decreasing its total holdings to 295 tonnes, representing 55% of its reserves.
Price Impact and Future Demand
Despite the increase in gold prices, central bank buying is expected to remain robust in the coming months. While the trend of high-volume purchases may ease as prices soar, the demand for gold as a secure asset will endure. Central banks continue to view gold as a reliable store of value and a hedge against economic uncertainties, reinforcing the enduring trend of net buying. The World Gold Council’s report emphasizes the resilience of central bank demand for gold, indicating a positive outlook for future purchases.
“The longstanding trend of net buying remains intact. This reinforces the findings from our latest central bank survey, which highlights several reasons (such as gold’s role as a store of value and its performance in times of crisis) why, despite the elevated price, central banks are still keen to accumulate gold. Based on these findings, we continue to be confident in our expectation that more buying is to come,” the report concludes.
