(Kitco News) - Central bank gold demand has dominated the marketplace for the last two years and that trend is expected to continue through 2024, albeit at a slightly slower pace.
In his latest comments on social media, Krishan Gopaul, Senior Analyst, EMEA at the World Gold Council, noted that the Reserve Bank of India and the Central Bank of the Republic of Turkey increased their gold reserves in the first month of the new year.
According to the post, India bought nine tonnes of gold last month, its first purchase since October.
Meanwhile, Turkey increased its official gold holdings by 12 tonnes. “Total gold holdings are now 552 tonnes, just 6% off the all-time high of 587 tonnes back in February 2023,” Gopaul said.
Market analysts have been closely monitoring Turkey’s official gold reserves as they were the biggest sellers last year.
In early spring 2023, Turkey imposed an import ban on gold to reduce its burgeoning current account deficit. The central bank’s gold reserves were tapped to meet significant investment demand as Turkish nationals bought physical gold to protect their purchasing power from rising inflation, which, at one point in 2022, hit 85%.
Following three months of significant selling, Turkey has been consistently buying gold since June.
According to data from the World Gold Council, central banks bought 1,037 tonnes of gold last year, missing the 2022 record by only 45 tonnes.
For the last two years, central bank demand has been double the average 10-year trend. The WGC said central bank demand is unlikely to maintain the current trend, and they expect purchases to fall back toward the long-term average in 2024.
Looking ahead, analysts expect central banks to continue diversifying away from the U.S. dollar as the deglobalization trend strengthens.
“Who could blame countries with exposure to US foreign policy for diversifying away from the US dollar at the margin, given the wide range of outlooks next year depending on who is president,” said Robert Minter, Director of Investment Strategy at abrdn, in a recent comment to Kitco News.