Net buying by central banks reached 145.5t in Q1, 68% higher y-o-y. This is the highest volume of Q1 net purchases since 2013 (179.1t), comfortably exceeding the five-year quarterly average of 129.2t. On a rolling four-quarter basis, demand reached a record high for our data series of 715.7t.
Demand from this sector remains robust. The factors that drove central bank net purchases to a 50-year high in 2018 remained relevant at the start of 2019. Economic uncertainty caused by trade tensions, sluggish growth and a low/negative interest rate environment continued to weigh heavy on reserve managers’ minds. And geopolitics still cause consternation. In the face of these challenges, central banks continued to accumulate gold.
Net buying was again notable, not only for its volume but also for its global spread.1 Russia was again the largest buyer, adding 55.3t in Q1. This brought gold reserves to 2,168.3t (19% of total reserves). Russia bought 274.3t in 2018 - the fourth consecutive year of +200t increases – while drastically reducing its US Treasury holdings, as part of its ‘de-dollarisation’ drive. Shortly after the end of Q1, Sergey Shvetsov, deputy head of the central bank, stated that it is necessary to “increase forex and gold reserves even more” in the face of “persisting sanction risks”.
China reported net purchases of 33t in Q1, having begun buying gold again in December after a 25 month pause. Monthly net purchases by the PBOC have averaged 11t over the last four months. Total gold reserves now stand at 1,885.5t, less than 3% of total reserves.
Several other banks also made significant additions to gold reserves in Q1. Ecuador bought gold for the first time since 2014, boosting gold holdings by 10.6t. Turkey also continued its programme of gold accumulation, purchasing 40.1t and India, which began purchasing gold again in 2018 after a nine-year hiatus, bought 8.4t in Q1. RBI gold reserves have now grown for 13 consecutive months, reaching 608.8t at the end of Q1. Kazakhstan (+11.2t), whose gold reserves have now grown for 78 consecutive months, Qatar (+9.4t) and Colombia (+6.1t) were also notable purchasers during the quarter.
Q1 saw country-level sales total 11.3t. This is the highest level of sales we have seen for some time and was primarily from three banks. Uzbekistan, which began reporting its gold reserves in March, sold 6.2t in Q1, while Mongolia (-3.4t) and Tajikistan (-1t) were the only other banks whose reserves declined by at least one tonne. It should be noted that our Q1 figure of 145.5t includes – as a sale – the 2015 US$1.6bn (~42t) swap between Venezuela and Citibank, which expired in March and has yet to be reported via the IMF.