In the first half of the year, the global central banks' new purchase of gold reached a new high of 483 tons, an increase of 5% year-on-year. Although the People's Bank of China suspended the increase in gold holdings for three consecutive months, Turkey and India ushered in a 'gold rush'.

According to the latest data compiled by the World Gold Council on July 30, the central bank's gold demand in the second quarter totaled 183 tons, an increase of 6% year-on-year, but the purchase rate was approximately 39% lower than that of the first quarter.

Although the central bank's gold purchases slowed down in the second quarter, it still set a record in the first half of 2024.

Some analysts said:

'Given that the gold price of most currencies is at or close to record levels, it is not surprising that the central bank's purchase volume slowed down in the second quarter.'

However, economists point out that since the market's confidence in US assets has weakened, foreign exchange market volatility has intensified, US interest rates have remained high, and many central banks hope to diversify their reserve asset categories, it still makes sense to invest in gold.

Turkey and India lead the way.

In the first half of the year, Turkey became the largest gold buyer, increasing its gold reserves by 45 tons, most of which occurred in the first quarter. The purchase rate slowed to 15 tons in the second quarter.

After selling 160 tons of gold in the spring of 2023, Turkey has been buying gold for 12 consecutive months.

India followed closely and became the second largest gold buyer. The Reserve Bank of India increased its gold reserves every month this year, totaling 37 tons. Since 2017, the Indian central bank has increased its gold reserves by more than 260 tons.

Indian economists stated that the driving force for buying gold includes both political and economic factors:

'Especially since the 'reliability' of the US dollar has 'weakened' and people's confidence in US assets has 'clearly declined'.'

Some economists also pointed out that due to the intensification of foreign exchange market volatility, high US interest rates, and the desire of central banks of various economies to diversify their reserve asset categories, (investing in gold) is still meaningful.

Poland and other central banks' gold-buying strategies.

Poland was the largest gold buyer in the second quarter. Its gold reserves increased by 19 tons, and currently gold accounts for 13% of its total reserves. Adam Glapiński, the president of the National Bank of Poland, reiterated his plan at a press conference in early June to increase the proportion of gold in total reserves to 20%.

Last year, the Polish central bank purchased 130 tons of gold, increasing its holdings by 57% to 359 tons. Glapiński said holding gold is related to financial security and stability, and gold can maintain its value even if the global financial system goes dark.

In addition, Uzbekistan increased its gold holdings by 7 tons in the second quarter, and the Czech Republic increased its gold holdings by 6 tons.

It is worth noting that Singapore has been steadily increasing its gold holdings this year, but it sold 12 tons of gold in June; the Philippines was the largest seller in the first half of this year, with its gold reserves decreasing by about 25 tons.

The People's Bank of China has suspended its purchases of gold for the third consecutive month.

China has defended its position as the world's largest gold consumer for many years. However, affected by the continuous rise in the price of gold, China's domestic gold demand has shown a decline in the first half of this year. Some analysts believe that this is the main reason why global central bank demand has slowed in the second quarter.

According to the People's Bank of China's latest report, China's gold reserves were 72.8 million ounces at the end of July, unchanged from the previous month. This is the third consecutive month that the People's Bank of China has suspended the increase in gold reserves.

Despite this, China's gold reserves increased by nearly 30 tons in the first half of the year. Previously, China had increased its gold reserves for 18 consecutive months, including the purchase of 2 tons of gold by the central bank in April of this year.

Analysts: Gold fever remains unabated.

Analysts believe that although the central bank's demand for gold slowed in the second quarter, there is no indication that their interest in gold has diminished.

The latest survey by the World Gold Council shows that 29% of central banks plan to increase their gold reserves in the next 12 months, the highest level since the survey began in 2018. Only 3% of central banks said they plan to reduce their gold reserves.

In addition, the net gold purchases by central banks in 2023 will reach 1,037 tons, the second consecutive year that central banks have increased their gold reserves by more than 1,000 tons. In 2022, the net purchase of gold by central banks worldwide reached a record high since 1950, including the record after the US dollar was decoupled from gold in 1971.

Analysts predict:

"Central banks' gold purchases will remain high for at least the next six years, as trust in US fixed-income assets declines and the rise of non-reserve currencies may support central bank purchases of gold."