Central banks around the world are on an unprecedented buying spree for gold, with countries like China, Turkey, and India leading the charge. This trend, aimed at diversifying currency holdings and reducing reliance on the US dollar, has been gaining momentum over the past 13 years.
According to the World Gold Council (WGC), central banks have purchased a total of 673 tons of gold in 2022 and 2023, surpassing all previous annual totals since 1967. The United States holds the largest gold reserves in the world, with a staggering 8,133 tons.
Russia and China, America’s main geopolitical rivals, have emerged as the top buyers of gold in recent years. The People’s Bank of China alone purchased 225 tons of gold last year. Seven of the countries with the largest gold reserves also rank among the top 10 largest economies globally.
European countries like Germany, Italy, and France are among the top holders of gold, followed by Russia and China. Switzerland, Japan, India, Holland, and Turkey round out the list of countries with significant gold reserves.
During the third quarter of 2022, central banks collectively bought nearly 400 tons of gold, marking a significant increase in demand. This spike in gold purchases is a record-breaking phenomenon, with the World Gold Council reporting that the amount is more than double the previous record set in the third quarter of 2018.
The trend of central banks buying gold at unprecedented levels is indicative of the ongoing shift towards using gold as a hedge against economic uncertainties and dollar fluctuations. It will be interesting to see how this trend evolves in the coming years and its impact on the global financial landscape.