Central banks register marginal net purchases in October

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Central banks register marginal net purchases in October

Krishan Gopaul
Senior Analyst, EMEA
World Gold Council

Posted:

Today we’ve published our closely-watched central bank statistics, updated through October 2021.1 And the latest data shows that central banks bought 2t of gold in October, as decent buying was counteracted by sales from a handful of banks. This is the lowest monthly total in 2021 since January’s 13t net sale.

 

Central bank net purchases in October were the lowest monthly total since January *


*Data to 30 October 2021.
Source: IMF IFS, Respective Central Banks, World Gold Council


Compared to H1, monthly central bank buying remains muted in H2. The sizeable and sporadic purchases which marked the first half of the year have been largely absent, and instead we’ve seen more regular, modest accumulation from several buyers.

A small number of banks dominated activity during October. Four central banks were responsible for the vast majority of additions during the month. Kazakhstan, a regular gold buyer, was the largest purchaser, adding almost 6t. This takes its gold reserves to 403t, 15t (4%) higher y-t-d. India was the second largest buyer, adding 3.8t. India’s gold reserves have now increased by 71t y-t-d, setting it on course for its highest annual level of buying since 2009, and taking total gold reserves to 748t. Russian official gold reserves rose by 3t during the month, taking its gold reserves to 2,302t (21% of total reserves). Russia has made a series of 3t purchases so far this year, which we believe are likely related to coinage sales rather strategic purchases.

Ireland bought 1t of gold in October, on top of the 1t purchase in September, which was the first increase in its gold reserves since a 0.5t addition in 2008. Its total gold reserves now stand at 8t (4% of total reserves). Ireland’s purchases are particularly notable given that buying has been dominated by emerging markets since 2010.

There are also reports of a 3.2t purchase by the Central Bank of Mongolia in October. Current IMF data for Mongolia is only available to end-August, so we need to wait for confirmation on this.

Three central banks reported sales during October: Uzbekistan (8t), Turkey (2t), and Qatar (2t).

One other significant new piece of information disclosed in the latest IMF is for Singapore. The IMF now reports that the Monetary Authority of Singapore (MAS) bought 26t of gold, accumulated during May and June. This is Singapore’s first gold purchase since at least 2000, and another instance of a developed market central bank buying gold this year. A spokesman for MAS stated: “The change in gold holdings is a result of the continuous and ongoing efforts by MAS to ensure that the official foreign reserves (OFR) portfolio remains well-diversified and resilient through economic and market conditions,”.

 

Year-to-date net purchases have been driven by a large number of central banks*


*Data to 30 October 2021.
Source: IMF IFS, Respective Central Banks, World Gold Council


Despite the quieter level of net purchases in October, central bank demand already comfortably eclipses 2020’s annual total. As we move closer to the end of the year, one thing is clear: interest in gold this year has been significant. And the latest data release from the IMF shows us that it is no longer just emerging market central banks buying gold.

While we believe that central banks will remain net purchasers in November and December, the exact level is difficult to predict. As a result, we maintain our current overall expectation for full year 2021 net purchases to exceed 450t. We’ll review central bank demand for the year in our next Gold Demand Trends report which will be published at the end of January.

For more regular data and insight on central banks gold demand, and the gold market in general, you can find me on Twitter.


Footnotes

1Our data set is based on IMF data but is supplemented with data from respective central banks where it is available and not reported through the IMF at the time of publication. This data may be revised in our next monthly update should more data become available.

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