Gold Demand Trends Q1 2024

With central banks accelerating their gold purchases to above 1,000t per year in 2022 and 2023, the market is finally beginning to appreciate the importance of their contribution to gold demand. Accounting for almost a quarter of annual gold demand in both those years, many have attributed central banks’ ongoing voracious appetite for gold as a key driver of its recent performance in the face of seemingly challenging conditions: namely, higher yields and US dollar strength.

And despite the high bar set in the last two years, the voracious buying has continued into 2024 in the face of the renewed gold price rally. Global official gold reserves rose by a net 290t, the highest Q1 total in our data series back to 2000; 1% higher than the previous Q1 record set in 2023 (286t) and 69% more than the five-year quarterly average (171t).

Not only is the long-standing trend in central bank gold buying firmly intact, it also continues to be dominated by banks from emerging markets. Ten central banks reported increased gold reserves (of a tonne or more) during Q1, all of whom have been active over recent quarters.

East and Central Asian central banks accounted for the majority of Q1 net purchases. The People’s Bank of China carried its recent momentum into Q1, reporting an addition of 27t to its gold reserves during the quarter. 

This marks the 17th consecutive monthly increase, helping to lift its reported gold holdings to 2,262t (16% higher than at the end of October 2022 when it resumed reporting monthly additions). The data indicates that this is the PBoC’s longest ever reported streak of monthly additions to its gold reserves. 

Together with the higher gold price, this pushes gold’s share of total reserves close to 4.6%, notably higher than the 3.2% share it had in October 2022.

The Reserve Bank of India grew its gold reserves by 19t during the first quarter, exceeding last year’s annual net purchases (16t). The National Bank of Kazakhstan (16t), the Monetary Authority of Singapore (2t) – the only developed market bank to add to its gold reserves – the Central Bank of Oman (4t) and the National Bank of the Kyrgyz Republic (2t) were the other notable buyers in the region.

In Europe, both the Czech National Bank (5t) and the National Bank of Poland (1t) reported increasing their gold reserves during the period. And in the Middle East, the Qatar Central bank reported a 2t increase in its gold reserves in Q1.

Elsewhere, the Central Bank of Turkey continued to accumulate gold through Q1. It bought a further 30t, bringing its gold reserves to 570t. There was no repeat of the selling that occurred in March last year, despite continued tightness in the domestic gold market due to heightened demand. The central bank has now bought gold for ten consecutive months, helping to lift gold reserves towards levels seen a year ago.²

Reported gold reductions (of a tonne or more) totalled 25t in Q1. But a breakdown of this figure shows that the Central Bank of Uzbekistan (14t) and the Bank of Thailand (10t) accounted for the lion’s share. It should be noted for the latter, however, that “The reduction was not due to any gold sale.“. The Bank of Thailand further stated that: “Starting March 29, 2024, monetary gold is revised to be in line with gold reported in International Reserves and to comply with IMF definition where only gold with a purity of at least 995/1,000 should be recorded.”.³   By comparison, notable selling from the Central Bank of the Philippines (2t) was far more modest.

In April, a Bloomberg report stated that the National Bank of Kazakhstan may resume gold sales owing to the “positive dynamics” of the gold price. However, it also indicated that its plan was to keep gold’s share of total reserves at 50-55%. This is not the first report of this kind, where the central bank has made clear that it continues to optimise its international reserves. Given that since 2011 the central bank has had the right to buy all domestically produced gold, and that its international reserves hold a substantial weight of gold, some selling from time to time can be expected.⁴

Unreported buying – the difference between quarterly data presented in Gold Demand Trends and central bank activity reported via public sources, such as the IMF – jumped back up to levels not seen since 2022. Lags in reported data mean that further detail around this activity may yet come to light.⁵

In what was an interesting quarter for the gold market, central banks made clear their commitment to the longstanding trend of gold buying. While the recent price rally may have impacted trade execution, for those central banks that manage their gold reserves more actively, we do not expect it will derail any strategic gold accumulation plans they may have. But more data will be needed to better assess how the current price levels may/may not have impacted central bank activity. As such, we retain our view that central banks will remain net buyers in the coming quarters, providing a key pillar of support for gold. For more on this, please see the Outlook section.