In their latest commentary, the WGC said that central banks bought 20 tonnes of gold in August, down slightly from 37 tonnes bought in July.
Krishan Gopaul, senior analyst for Europe, Middle East and Asia at the WGC, said August was the fifth consecutive month of net central bank gold purchases.
The report said that Turkey, Uzbekistan, and Kazakhstan were the three central banks that increased their gold reserves. Turkey, the largest gold buyer so far this year, purchased 9 tonnes of gold in August, increasing its total reserves to 478 tonnes, the highest level since the second quarter of 2020.
Uzbekistan’s central bank bought 8.7 tonnes of gold for the third consecutive month. The nation has been actively buying gold after selling 25 tonnes at the start of the year. So far this year, Uzbekistan’s gold reserves have increased by 19 tonnes to 381 tonnes.
Finally, Kazakhstan’s central bank bought 2 tonnes of gold in August, after selling 11 tonnes in July. Kazakhstan’s gold reserves now total nearly 375 tonnes.
“As we have noted before, it is not uncommon for banks which buy from domestic production – such as Uzbekistan and Kazakhstan – to switch between buying and selling,” Gopaul said.
Although not part of the official data, WGC noted that Qatar potentially bought gold in August.
“The precise tonnage increase has not yet been reported in the IMF IFS database, we have decided to exclude it from our data. If confirmed, it would be the fifth consecutive month in which Qatar’s official gold reserves have risen,” Gopaul said.
Although data points to sold central bank demand, many analysts are focused on what the data doesn’t show.
In an interview with Kitco News, Nitish Shah, head of commodity research at WisdomTree, said that he suspects Russia is buying domestic gold and not reporting its holdings.
He added that unidentified forces in the physical market are holding up demand and central band purchases could be more significant than the numbers suggest.
“According to our models, given where the U.S. dollar is and how fast bond yields have risen, gold prices should be 20% lower,” he said.
Shah pointed out a significant disconnect between the physical gold market and paper futures. He added that undisclosed central bank demand could explain why the physical market is as tight as it is.
Along with Russia, Shah said that he suspects China’s central bank is increasing its gold reserves without reporting it. He noted that premiums for Chinese gold bullion continue to rise even as the nation’s gold imports increase.
Trade data from The Swiss Federal Customs Administration shows that China imported 5.7 tonnes of gold from Switzerland in August, the largest shipment of gold since April 2020.
“We see a lot of gold flowing into China and yet premiums are pretty high. We don’t have much information on where that gold is going,” he said.
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