Central bank gold demand hits first-quarter record, investments surge
The process of crafting gold is seen at the Krastsvetmet company, one of the world's largest producers of precious metals in Moscow, Russia on January 31, 2023.
Demand for gold among central banks notched a first-quarter record high in the three months to the end of March as overall global demand painted an otherwise "mixed picture," according to the World Gold Council.
Gold prices broke through the $2,000 per ounce barrier this week and are flirting with record highs as global economic uncertainty, a possible pause in Federal Reserve interest rate hikes and potential further trouble in the U.S. banking sector drive investors toward the precious metal.
The WGC's quarterly Gold Demand Trends report, published Friday, showed demand (excluding over-the-counter) was down 13% in the first quarter from the same period last year, though base effects were in play as demand spiked that quarter as investors fled risky assets following Russia's invasion of Ukraine.
Total gold demand, however, was up 1% from the first quarter of 2022 thanks to a recovery in the OTC market.
In the three months to the end of March, central banks added 228 tons to global reserves, the highest rate of purchases seen in a first quarter since the data series began in 2000, though a slower rate than in recent quarters.
Louise Street, senior market analyst at the World Gold Council, told CNBC on Thursday that this was a continuation of trends that saw central bank gold buying soar to an 11-year high in 2022.
"Top of the tree for gold in terms of why official sector institutions hold it is always things like its its role as a diversification asset, its long term store of value, but increasingly over the last two years, we've seen how the importance that they placed on its performance during times of crisis," Street explained.
The WGC expects demand among central banks to moderate this year after 2022's spike, though noted that where previous buying had been concentrated in developing markets, more developed financial centers were now increasing their demand.
Source: CNBC
