Central Banks' Gold Appetite: Analyzing October 2023's Strong Demand

Article Summary

• Central banks continue to buy significant amounts of gold in October 2023.
• Poland and Brazil lead the purchasing activity.
• Motives behind purchases are strategic, not speculative.
• More countries plan to increase their gold reserves.

According to data from the World Gold Council (WGC), central bank demand for gold remained strong in October, with net gold purchases reaching 53 tonnes, a 36% increase month-on-month, marking the highest monthly net demand so far this year and continuing the strong momentum throughout the year. Gold purchases were concentrated in a few central banks, with the National Bank of Poland being active again that month, becoming the leader in this area.

The pace of central bank gold buying has accelerated in recent months.

As of October, declared net gold purchases by central banks this year totaled 254 tonnes, a slowdown compared to the previous three years. This may reflect the impact of higher gold prices. Nevertheless, continued gold purchases by central banks in emerging markets strongly suggest that these purchases are strategic rather than speculative, highlighting gold's importance in the context of persistent macroeconomic uncertainty. This conclusion is also supported by the findings of the WGC's annual survey.

The overall trend in gold purchases by global central banks since the beginning of the year has slowed slightly compared to the past three years.

The gold buying group in October consisted mainly of central banks that traded frequently throughout the year, with a few institutions contributing the bulk of the increase. The National Bank of Poland returned to the market in October after suspending gold purchases since May. The central bank recently raised its target for gold allocation to 30%, purchasing 16 tonnes of gold that month, bringing its gold reserves to 531 tonnes, representing 26% of total reserves at end-October prices.

The Central Bank of Brazil bought gold for the second consecutive month, increasing its holdings by 16 tonnes in October, after buying 15 tonnes in September. Its current gold reserves stand at 161 tonnes, representing 6% of total reserves.

The central banks of Uzbekistan (9 tonnes), Indonesia (4 tonnes), Turkey (3 tonnes), the Czech Republic (2 tonnes), Kyrgyzstan (2 tonnes), Ghana (over 1 tonne), China (over 1 tonne), Kazakhstan (over 1 tonne) and the Philippines (over 1 tonne) also purchased gold in October.

As the WGC wrote this article, the Central Bank of Russia was the only central bank to announce a decrease in its gold reserves during the month - down 3 tonnes to 2,327 tonnes.

Since the start of the year, the National Bank of Poland (83 tonnes) remains the largest gold buyer in the official sector, with its gold purchases double those of Kazakhstan, the second largest buyer (41 tonnes). Although gold purchases remain concentrated in emerging market central banks, the list of buyers (including new and old faces) remains broad.

Net gold purchases by various central banks since the beginning of the year.

Central Banks Aim for Higher Gold Reserves

Serbian President Aleksandar Vucic recently stated that the National Bank of Serbia plans to increase its gold reserves to at least 100 tonnes by 2030. This long-term goal means that its current reserves will nearly double - its gold reserves stood at 52 tonnes at the end of October, also indicating that gold will continue to be seen as a strategic asset in the country's reserve portfolio.

At the recent London Bullion Market Association (LBMA) conference in Kyoto, Madagascar and Korea also expressed their intention to increase their gold reserves, although neither country gave a specific timeline.

This trend confirms the findings of the WGC's 2025 survey: 95% of respondents expect central bank gold reserves to increase in the coming year.