Original title: global central banks resumed net gold sales in November, with a net drop of 6.5t in total gold reserves. Source: central banks, Intercontinental Exchange IncBenchmark management body, International Monetary Fund, World Gold Council
Data released by the State Administration of Foreign Exchange in January 2021 show thatChina's foreign exchange reserves in December 2020 were $3.216522 trillion, an increase of $38.032 billion, or about 1.2 per cent, from November. At the end of December, the central bank's gold reserves were 62.64 million ounces, or 1948.3 tons, the same as at the end of November.
In additionAccording to data released by the World Gold Council in January 2021, the world's official gold reserves totaled 35191.1 tons as of November 2020. Of this total, the euro zone (including the European Central Bank) totaled 10772.2 tons, accounting for 59.4 percent of its total foreign exchange reserves.
Global official gold reserves
International Financial Statistics, January 2021
The official gold reserve data of the top 15 in the world show thatAs of November 2020, India increased its holdings by 2.8 tons, Turkey reduced its holdings by 20.9 tons, and Kazakhstan increased its holdings by 1.7 tons. Other top 15 central bank official gold reserves remain unchanged.
After the net buying trend in October, global central banks returned to net gold sales in November, with the world's official gold reserves falling by a net 6.5 tonnes.Similar to the situation in August-September, the central bank's net gold sales are the result of continued moderate gold purchases offset by a certain scale of gold sales.
Total purchases by central banks around the world in November were 16 tons., which was roughly the same as in August and September. On a country-by-country basis, the Central Bank of Uzbekistan continued to buy gold this month, buying 8.4 tons of gold. Other countries that increased their official gold reserves in November include Qatar (3.1 tons), India (2.8 tons), Kazakhstan (1.7 tons) and Ukraine (0.6 tons).
However, this is not enough to offset the total gold sales. In Turkey, strong local gold demand has led to an increase in gold trading between the country's commercial banks and the local central bank, leading to 20.9 tonnes of gold sales by the Turkish central bank. In addition, another noteworthy gold-selling central bank is Mongolia, whose official gold reserves have fallen by 2.4 tons.
Overall, demand from central banks has become more volatile in recent months, fluctuating back and forth between net purchases and net sales. This marks a change in the state of continuous gold purchases that we have always been accustomed to in this market, which also raises the following two important questions.
First of all, does this mean that the existing net gold buying trend has to make way for new trends, or does it mean that there is no trend at all? Since 2010, central banks have basically maintained quarterly net purchases, and the occasional monthly net sales are not as concentrated as they were in the second half of 2020, with the exception of Turkey, recent large-scale central bank gold sales have also been caused by uncertainty caused by the epidemic and increased financial pressures.
Gold outperformed many other traditional reserve assets in 2020, providing an additional boost for central banks to stabilize markets and currencies.However, it is too early to tell whether the trend of continued net gold purchases by central banks will continue, or whether it has already ended, or whether there is a new trend. Central bank data for December 2020 and early 2021 will play a vital role in shaping the overall situation in the future.
Second, does it herald a long-term change in central banks' attitudes towards gold?We don't think there has been a change in the central bank's concept of gold.
As mentioned above, the price of gold rose by 25% in 2020, playing an active role when the central bank needed to increase the value of its total foreign exchange reserves. A survey of central banks conducted by the World Gold Council earlier this year showed that gold was highly valued as a risk mitigation asset. Although uncertainty has diminished in recent months (such as the US election and Brexit), the economic impact of the outbreak still poses important risks and needs to be managed.
The World Gold Council expectsDespite the recent momentum of net gold sales, central banks are still expected to achieve net purchases in 2020, with annual net purchases for 11 consecutive years since the last.
This article is from the World Gold Council
