World Central Banks Ramp Up Gold Reserves in Record Third Quarter

Central bank buying of gold rebounded strongly in September, with global banks adding a total of 40 tons to their reserves. This surge comes after a slower pace in August, as reported by the World Gold Council.

The total increase in central bank gold reserves for September was 48 tons, with only 8 tons of selling reported.

This boost in September helped propel central bank gold buying to a record high for the third quarter of the year.

Year to date, central banks have added a net of 694 tons to their gold reserves, maintaining a pace similar to that of 2022 levels.

Leading the charge in September were two Eastern European countries. Poland emerged as the top buyer, increasing its reserves by an impressive 22 tons. The National Bank of Poland has expressed its intention to continue adding to its reserves, aiming to hold at least 20% of the country’s reserves in gold.

Hungary also bolstered its gold holdings by nearly 16 tons, emphasizing the importance of gold as a safe-haven asset in times of economic uncertainty.

India continued its trend of expanding gold reserves, adding another 6 tons in September. The RBI’s push to accumulate gold is based on both political and economic factors, as confidence in the U.S. dollar wanes and volatility in the FX market rises.

Other countries that increased their gold holdings in September include Turkey and the Czech Republic, while Kazakhstan and Jordan were among the sellers.

Despite these official disclosures, it is believed that some central banks may not accurately report changes in their gold reserves. For instance, China is suspected of holding more gold than it publicly states.

The future outlook for central bank gold buying remains strong, with 29% of banks planning to increase their gold reserves in the next 12 months, according to a recent survey by the World Gold Council.

Analysts predict that central bank gold buying will continue to be robust in the coming years, driven by factors such as distrust in U.S. fixed-income assets and the rise of non-reserve currencies.

Overall, central bank gold buying plays a crucial role in maintaining financial stability and confidence in economies worldwide. It serves as a hedge against economic uncertainty and a diversification strategy for central bank reserves.

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