The countries reporting the largest purchases in the first two months were Singapore (51.4 tonnes), Turkey (45.5 tonnes), China (39.8 tonnes), Russia (31.1 tonnes) and India (2.8 tonnes).
Turkey bought 23 tonnes of gold in January, making it the biggest buyer of the precious metal among central banks globally over the period. The country now holds 565 tonnes of gold, the highest level on record, according to data from the World Gold Council.
Gold demand
Gold prices have been heading higher as investors pile in, worried about slowing economies, rising credit stress and geopolitical risks. Central banks are big buyers and their appetite for gold in 2022 rose 150 per cent to reach a 55-year high.
China may invade Taiwan, or it may not. Either way, there is financial uncertainty. Precious metals are the counterbalance to that uncertainty. Russia, China, Brazil, Egypt, India, Turkey, Qatar, and many other countries are stockpiling gold to overthrow the Dollar and ensure sovereignty.
Came as gold prices threatened record highs
Central banks anxious about a rising tide of geopolitical risk are buying gold at “extraordinary levels”, with the World Gold Council declaring the March quarter this year the best in a decade for central bank purchases.
The countries reporting the largest purchases in the first two months were Singapore (51.4 tonnes), Turkey (45.5 tonnes), China (39.8 tonnes), Russia (31.1 tonnes) and India (2.8 tonnes).
Population figures are from the World Bank and are for 2021. The largest buyer of gold from 2017 to 2022 is, by far, the central bank of Russia (though data for Russia is actually only until the end of 2021.
The records show the biggest handler of Russian gold exports to the UAE was Temis Luxury Middle East, a Dubai subsidiary of French logistics provider Temis Luxury, which participated in the import of 15.6 tonnes valued at $863 million between Feb. 24, 2022 and March 3 this year.
Central banks look to purchase gold as a hedge against a weakening dollar or any other fiat currency. Gold's role as a portfolio or investment diversifier also aids in its ability to mitigate risk. Central banks have therefore traditionally held large reserves of gold to safeguard their financial systems.
ANZ Research forecasts gold to trade at $2,000 at the end of 2023 and accelerate to $2,075 by September 2024, citing a pause of Fed's interest rate hiking cycle and weaker USD as the primary reason for the upgrade.
Silver can be considered a good portfolio diversifier with moderately weak positive correlation to stocks, bonds and commodities. However, gold is considered a more powerful diversifier.
One of the primary reasons billionaires invest in gold is because it serves as a safe haven and store-of-value asset. During times of economic instability or market volatility, gold tends to hold its value or even appreciate, providing a level of protection for investors.
Leading markets for gold exports from Australia FY 2022
China was the leading export destination for Australian gold in terms of value.
China Keeps Stockpiling Gold, Adds 18 Tons in March to Reach 2,068 Tons in National Reserve.
Turkey's gold imports have increased in recent years as more Turks buy bullion to protect their wealth from soaring inflation and a weakening domestic currency. The country had a current account deficit of $48.8 billion last year, largely because of the high amount of bullion entering the country.
Gold is considered a hedge against inflation
Gold and other precious metals have long been considered a smart way to fight inflation. That's because it tends to hold its value and preserve your purchasing power over the long haul, despite fluctuations in the dollar.
Gold is often hailed as a hedge against inflation—increasing in value as the purchasing power of the dollar declines. However, government bonds are more secure and have shown to pay higher rates when inflation rises, and Treasury TIPS provide built-in inflation protection.
China has recently considerably ramped up its gold imports, in an effort to diversify the People's Bank of China's (PBOC) holdings, as well as reduce their reliance on the US dollar (DXY).
Though Western sanctions have frozen a chunk of the country's foreign exchange reserves following its invasion of Ukraine, Vladimir Putin's regime has about $140 billion of the yellow metal that is beyond the direct reach of sanctions.
However, Russia's share in Chinese gold purchases remains small. The main supplier of gold to China is Switzerland, with sales in 2021 totaling over US$34 billion. Rounding out the top five suppliers to China are Canada, South Africa, Australia, and Hong Kong.
Australia is estimated to have the world's largest gold reserves, with 9,500 tonnes or 17 per cent of the total world estimated gold reserves of 57,000 tonnes.
China imported 1,343 tons of gold in 2022, the highest import level since 2018. Total gold imports for the year were up 64% over 2021. China ranks as the world's biggest gold consumer.
The United States has the largest gold reserve, with more than 8,000 metric tons of gold. This was more than twice the gold reserves of Germany and more than three times the gold reserves of Italy and France.