Central banks buy records of physical gold – Will a Bullrun for digital gold Bitcoin follow? 

• Central banks purchased 399 tonnes of gold in Q3 2022, pushing the total yearly purchases to 673 –the highest since 1967.
• WGC analyst expects jewelry demand for gold to increase in India and Southeast Asia.

According to the World Gold Council (WGC), Central banks purchased 399 tonnes of Gold in Q3 2022. The gold authority firm evaluated the total gold transaction by apex banks to be $20 billion. Reports show that gold demand, excluding over-the-counter sales in Q3, was 28 percent higher year-on-year, sitting at 1,181 tonnes.

Comparing Q3 2022 to Q3 2021, this year’s requests increased by 18 percent. The demand for gold was 922 tonnes in Q3 2021. The sudden increase in demand shows that gold is back to pre-pandemic levels. WGC believes the purchase of Gold bars by many central banks triggered the need for the precious metal. 

In the latest quarterly report of the WGC, the firm said there was a strong demand from jewelers and casual buyers of gold bars and coins. Regardless of the deteriorating global economy, gold’s jewelry consumption peaked at 523 tonnes, gaining 10 percent year-on-year. However, there was a reduction in bullion storage at exchange-traded funds (ETF). The demand to invest, excluding OTC, slumped by 47 percent year-on-year to 124 tonnes. 

Although gold is considered a risk-free investment during uncertain financial conditions, many investors are not holding onto their assets. Most gold investors sold shares in gold-backed ETFs when the interest spiked and invested in other assets. The financial action pushed down the price of gold by 8 percent in Q3 2022. 

Further information from the WGC shows that the Q3 2022 gold purchase by central banks is the highest quarterly report recorded since 2000. Interestingly, the total gold purchases from January to September 2022 sit at 673 tonnes, exceeding the yearly purchases ever recorded since 1967. 

Central banks Purchasing gold in 2022

The central banks of Turkey, Uzbekistan, Qatar, and India were the top buyers of gold in Q3 2022. However, the WGC says that some undisclosed top financial institutions purchased an enormous amount of gold. These banks do not publicly report their gold pile purchases, and the WGC did not give hints about which countries these could be. Speculations say these banks could include the People’s Bank of China (PBoC) and the Bank of Russia. These two banks do not regularly publish information about their acquired assets. 

Many Turks purchased gold to shield themselves from the country’s stinging inflation. The purchase of gold bars and coins in Turkey increased to 46.8 tonnes in Q3 2022. Turkey’s aggressive gold investment skyrocketed by over 300% year-on-year. 

Louise Street of WBC stated:

Looking ahead, we anticipate central bank buying and retail investment to remain strong. We also expect to see jewelry demand continue to perform strongly in some regions such as India and Southeast Asia.

With central banks looking to gold as a reserve in these economically uncertain times, retailers might look to Bitcoin- digital gold- as a safe haven during these tough times.