Gold Nuggets: Will Central Banks Continue Buying Gold?


Chief Gold Strategist, State Street Global Advisors

  • Central banks look set to continue to be net purchasers of gold for at least the next 12 months
  • Demand is predominantly from emerging market central banks, continuing a 12-year buying trend
  • Net central bank purchases are likely to have a favorable impact on the gold market

For more than a decade now, the world’s central banks have been net purchasers of gold for their official reserves, providing important support for the price of the metal. The buying, mostly by emerging market central banks, has accounted for between 10% and 15% of total global demand. What is the outlook for this source of demand, and how long might it continue? Conversely, are there any potential central bank sellers lurking out there?

For insight on current central bank sentiment and clues about how that may or may not change in the future, we consulted the World Gold Council’s annual central bank survey. In this year’s report, the number of central bank respondents that expect their own country’s official gold reserves to increase over the next 12 months was 25%, up from 21% a year ago.1 In addition, 61% of respondents believe global gold reserves will increase over the same period.2

Central Banks Intend to Increase Their Gold Reserves

Central Banks Intend to Increase Their Gold Reserves

Based on the survey results, it appears that the purchasing is likely to continue through at least the end of 2022 so the most recent buying trend should continue. As for potential sales out of official reserves, one country’s name has been mentioned more than any other in recent months: Russia. But there is no hard evidence to support such claims. For more than a decade now, Russia has been one of the world’s largest purchasers of gold for reserve purposes. With this pattern of purchasing firmly established, recent comments speculating that Russia has been secretly selling gold out of its official reserves seem counter-intuitive. In my view, if any Russian gold is reaching world markets, it is far more likely to be coming out of current production rather than reserves.

Evolution of Central Bank Gold Demand Over Time

So how have central bank attitudes towards gold shifted? Looking at the following chart, there are three relatively distinct trends over the past 50 years:

  • Nearly net-neutral from 1971 to 1988
  • Significant selling from 1989 to 2009
  • A major shift to purchasing starting in 2010

Central Bank Gold Activity Over the Past 50 Years

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1World Gold Council: 2022 Central Bank Gold Reserves Survey, published on June 8, 2022.
2World Gold Council: 2022 Central Bank Gold Reserves Survey, published on June 8, 2022.
3Bloomberg Finance, L.P., World Gold Council and State Street Global Advisors, as of May 31, 2022.

Originally Posted July 1, 2022 – Gold Nuggets: Will Central Banks Continue Buying Gold?


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