Central banks buy gold in bulk

In the first eight months of 2021, central banks increased their gold reserves by more than 360 tonnes.

Post-pandemic gold purchases

They reveal it data The World Gold Council, according to which most purchases took place in April and then slowed in August, but the purchase rate still remained quite high.

During the entire previous year, total purchases did not exceed 264 tons, so in just eight months, purchases were already 36% higher this year. During 2019, 707 tons were purchased, mainly from China (96 t), Russia (158 t), Turkey (125 t) and Poland (100 t).

This year, the largest purchases so far came from Thailand (90 t), Japan (80 t), Hungary (63 t) and Brazil (62 t), followed by India and Uzbekistan, each with more than 40 tons.

Compared to the average increase in the first six months of the year with the last five years, the increase in 2021 was 39%, which is quite significant.

At the current price of almost $ 57,000 per kilogram, 360 tons would cost over $ 20 billion.

Thailand has been hit hard by the pandemic, mainly because tourism has collapsed. This may have led its central bank to increase its gold reserves to deal with possible currency crises. It is worth noting that during the year, the Thai baht lost almost 10% of its value against the US dollar and returned to the level of four years ago after three years of growth.

India has been buying large quantities of gold continuously for three years. So much so that, since 2019, it has increased its reserves by a total of 118 tonnes, which corresponds to 20% of what it had at the end of 2018. To date, its gold reserves have reached 6.4% of the value of its total foreign exchange reserve.

The largest percentage increase in 2021 was achieved by Hungary, which tripled its stocks with an added 63 tonnes. Although Hungary is a member of the European Union, it has not adopted the euro and uses its forint, which in 2021 lost almost 5% of its value against the dollar. However, the most significant decline has occurred since June with a loss of almost 9%. The purchase of gold took place in March, at the same time as a lightning loss of almost 5% of the value of the forint against the dollar in just over a week.

Russia has been buying gold continuously since 2012. Chinese numbers stopped in 2019, although many analysts believe it continued to buy in the following years.

It is possible that this year’s shopping boom is the result of last year’s suspension of purchases. However, it may also be due to monetary and fiscal stimul provided in response to the pandemic. Thus, central banks buy gold to hedge against inflationary risks.