Central bank gold purchases surged to a record 289 tons in the second quarter of 2024, bouncing back sharply from a weak start to the year, according to World Gold Council data analyzed by BNY’s Geoff Yu. Poland and China drove the aggressive buying spree during the period, though Yu suggests this pace of accumulation is unlikely to continue.
The massive quarterly demand follows an unusually subdued first quarter, indicating central banks remain committed to diversifying reserves away from traditional currencies despite the uneven buying pattern. The Q2 figure marks the highest quarterly central bank purchases on record, underscoring ongoing concerns about currency stability and geopolitical tensions among monetary authorities.
However, market participants should prepare for a cooling in institutional demand going forward. The spike appears to represent catch-up buying rather than a sustainable new trend, particularly given elevated gold prices and budget constraints facing many central banks.
FXnCO Insight
Traders should anticipate reduced central bank support for gold prices in coming quarters, potentially creating downward pressure unless investor demand compensates for the expected institutional pullback.
Source: FXStreet