What’s new: Global central banks increased their gold hoards last year, spurred by soaring inflation and geopolitical risk, according to a report Tuesday by the World Gold Council.
Gold demand in 2022 increased 18% year-on-year, hitting 4,741 tons, the highest annual total since 2011, propelled by hefty central bank buying and persistently strong retail investment, the industry group said.
In 2022, global central banks bought 1,136 tons of gold, the highest level in 55 years, accounting for nearly a quarter of the total demand, the report said.
Meanwhile, gold prices posted a small gain in 2022 and closed the year at $1,800 an ounce, despite facing notable headwinds from the strong U.S. dollar and rising global interest rates.
Central banks are likely to remain bullish on gold in 2023 and remain net buyers, but the increase in gold reserves is likely to be moderate compared with 2022, the World Gold Council expected.
The bulk of central bank buying in 2022 came from emerging markets, with Turkey and China accounting for more than half of the increase in gold holdings.
The background: China’s central bank added 62 tons of gold to its reserves in the last two months of 2022, the People’s Bank of China disclosed, the first increase it has reported in more than three years.
The addition brought China’s total gold reserve to 2,020 tons, the seventh-biggest central bank bullion hoard in the world, data from the State Administration of Foreign Exchange showed.
Given the geopolitical risks of Russia’s war in Ukraine, China may consider reducing the amount of U.S. dollar bond assets in its official reserves and increasing its gold holdings, analysts said.
Contact reporter Denise Jia (huijuanjia@caixin.com) and editor Bob Simison (bob.simison@caixin.com)
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