Mumbai: Gold purchases by central banks surged to a record high of 800 tonnes between January and September amid sticky inflation in the US and Europe’s richer nations and mounting geopolitical uncertainties.
The central banks of China, Poland and Singapore were among the largest buyers, leading to a 14% year-on-year growth, data from the World Gold Council (WGC) showed.
China has increased its gold holdings by 181 tonnes through the year, and now holds 2,192 tonnes in its reserves, which is 4% of the total reserves, the data showed.
“With central bank demand resuming its voracious pace after a slower Q2, we expect the annual total to approach last year’s record, and there’s an outside possibility it will exceed that figure,” the industry body for gold said.
Of the 800 tonnes that have been purchased in the January-September period, 337 tonnes were purchased in the September quarter, more than double the purchases in the June quarter. It is though lower by almost a fourth as compared to the previous year, which was a record high.
Central banks purchased 1,136 tonnes of gold in 2022, with 417 tonnes in the December quarter alone.
“While there is a nucleus of committed regular buyers, the range of countries whose central banks have added to their reserves over recent quarters is broad-based,” the council said.
INDIA DEMAND, PRICES
In India, the consumption of gold in the form of jewellery rose in the September quarter. Correction of gold prices in the local market from record highs and the festive season in southern India aided this growth.
“After a fairly soft start to the quarter – in part due to Adhik Maas, viewed as inauspicious for making new purchases – August and September witnessed a pick-up in activity thanks to festivals such as Onam and Varalakshmi,” the WGC noted.
While the demand for the rest of the year is seen as healthy, helped by wedding and festive purchases, sharply higher prices at the start of the current quarter could be a deterrent, the body said.
Gold prices have risen 6% in October in the local market, reflecting the tension between Israel and Hamas.
While demand is expected to remain strong amid buying in the festive and wedding seasons, prices could see a “reasonable” correction before the close of the year, said Navneet Damani, the senior vice-president for commodity research at Motilal Oswal Securities. He sees gold prices correcting up to ₹57,000-58,000 per 10 grams in the domestic market, which he believes is a suitable entry point for the near term.
