Central Banks Stockpile Record Tonnage of Gold in 2022

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Central Banks Stockpile Record Tonnage of Gold in 2022

According to the World Gold Council (WGC), central banks around the world added a staggering 1,136 tonnes of gold worth approximately $70 billion to their stockpiles in 2022, marking the largest central bank gold acquisition since 1967.

This shift in central bank attitudes toward gold highlights a departure from the trend seen in the 1990s and 2000s, when Western European central banks, who hold a significant amount of bullion, were selling hundreds of tons annually.

The Changing Tide of Central Bank Attitudes toward Gold

Since the 2008/2009 financial crisis, European central banks have ceased selling gold, and a growing number of emerging economies such as Russia, Turkey, and India have become prominent buyers.

Central banks are attracted to gold as a safe haven asset, as it is expected to maintain its value in times of economic turbulence and is not reliant on a single government or issuer. Additionally, gold allows central banks to diversify their portfolios away from assets such as U.S.

Treasuries and the dollar. "This is a continuation of a trend," said Krishan Gopaul, a World Gold Council analyst according to Reuters. "You had on the geopolitical front and the macroeconomic front a lot of uncertainty and volatility."

A Look at Last Year's Central Bank Acquisitions

Central banks from countries such as Turkey, China, Egypt, and Qatar reported purchasing gold in 2022.

However, roughly two-thirds of the gold purchased by central banks was not publicly disclosed. The banks of China and Russia, which do not regularly publish information regarding changes in their gold reserves, were among the institutions that did not disclose their gold acquisitions.

"Central bank buying (in 2023) is unlikely to match 2022 levels," the WGC said. "Lower total reserves may constrain the capacity to add to existing allocations. But lagged reporting by some central banks means that we need to apply a high degree of uncertainty to our expectations, predominantly to the upside."

Central Bank Acquisitions in 2023: Uncertainty Remains

The WGC has stated that it is unlikely that central bank buying in 2023 will match the levels seen in 2022.

Factors such as lower total reserves may constrain the capacity for central banks to add to their existing gold allocations. However, lagged reporting by some central banks means that a high degree of uncertainty remains, with the potential for central bank acquisitions to be higher than expected.