Demand from central banks continues to dominate the gold market. This is also an important factor explaining why, against the backdrop of rising bond yields and the steady strengthening of the U.S. dollar, the precious metal continues to hold long-term support levels.
According to the World Gold Council, central banks purchased 77 tons of gold in August, which is 38% more than July purchases. Over the past three months, central banks have bought 219 tons.
WGC analysts said the current purchases have firmly surpassed net sales seen in April and May, driven by active non-strategic sales from Turkey. Now, with full compensation for spring sales, a long-term trend of healthy demand from central banks is expected.
However, despite the high demand, buying activity was limited to a small number of central banks. China continues to dominate the market, acquiring 29 tons of gold in August.
Since the start of buying activity in November of the previous year, the People's Bank of China has increased its reserves by 217 tons, totaling 2,165 tons, which is just over 4% of their total foreign reserves.
The National Bank of Poland also remains a significant buyer after purchasing 18 tons of gold in August. According to the WGC, Poland has bought 88 tons of gold this year and aims to reach the target of 100 tons, as announced in 2021. Poland's current gold reserves of 314 tons make up 11% of their total foreign reserves.
Another central bank that the WGC highlights is Turkey's. The Central Bank of Turkey continues to rebuild its reserves after the April and May sales. In August, Turkey purchased 15 tons of gold.
Among other major buyers, central banks included Uzbekistan, which increased its gold reserves by 9 tons, the Reserve Bank of India, the Czech National Bank, and the Monetary Authority of Singapore, each of which purchased 2 tons of gold in August. At the bottom of the list is the National Bank of the Kyrgyz Republic, which acquired only 1 ton.
According to the WGC, there were no notable gold sellers last month. However, according to Bloomberg, the Central Bank of Bolivia monetized 17 tons of its gold reserves. If this information is confirmed, it would represent a 40% reduction in Bolivia's gold reserves. Currently, data on the gold reserves of the Central Bank of Bolivia have been unavailable since April.
Currently, central banks' demand for gold has become the main support for the precious metals market, as rising bond yields have created a challenging environment for precious metals.
