by Mike Maharrey, Gold Seek:

Despite central bank gold buying slowing moderately in the second quarter, it set a record through the first half of 2024.

Central banks globally added a net 483 tons of gold through the first six months of the year,  5 percent above the record of 460 tons in H1 2023.

In the second quarter, central bank gold demand totaled 183 tons, according to the latest data compiled by the World Gold Council. That was up 6 percent year-on-year, but about 39 percent lower than the Q1 buying pace.

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With gold at or near record price levels in most currencies, it’s unsurprising that central bank buying slowed in the second quarter.

China primarily drove the Q2 slowdown in central bank demand. The People’s Bank of China reported no additions to its gold reserves in May or June and only officially added 2 tons in April.

Prior to the pause in May, China had increased its gold holding for 18 straight months.

Many analysts believed the Chinese paused officially adding gold to their reserves in an effort to push gold prices lower.

When the Chinese reported no changes to their official reserves in May, it precipitated a panicked gold selloff. Despite the kneejerk reaction, it seems unlikely that the Chinese are finished adding gold to their reserves. There is also some speculation that China is adding a significant amount of gold to its reserves off the books.

Even with the pause, China still added nearly 30 tons of gold to its reserves through the first half of 2024.

Turkey was the biggest buyer through the first half of the year, adding 45 tons to its gold hoard. The bulk of its buying was in Q1, with the pace slowing to 15 tons in the second quarter.

The Turkish central bank has bought gold for 12 straight months after liquidating 160 tons of gold in the spring of 2023.

India ranks as the second-biggest gold buyer through the first half of the year. The Reserve Bank of India has added gold to its reserves every month this year totaling 37 tons.

In 2022, the Indian central bank added 33 tons of gold to its reserves followed by a 16-ton increase last year.

The Reserve Bank of India has been buying gold since 2017. Over that period, the RBI has increased its gold holding by over 260 tons.

An Indian economist told the Times of India that the push to accumulate gold was based on both political and economic reasons. He said that the “reliability” of the U.S. dollar has “diminished.” He noted the “noticeable decline” in the confidence in U.S. dollar assets.

Another economist told the Times,

“It makes a lot of sense (to invest in gold), given the increased volatility in the FX market, elevated interest rates in the U.S., and, of course, also as the central banks in each economy would like to diversify the asset classes in which they are parking their reserves.”

India recently transported 100 tons of its gold from the UK back into India.

Poland was the biggest gold buyer in the second quarter, increasing its holding by 19 tons. The country currently holds about 13 percent of its reserves in gold. At a news conference in early June, National Bank of Poland Governor Adam Glapiński reiterated his plan to increase gold’s share of total reserves to 20 percent.

Poland was the second-biggest gold buyer in 2023. The Polish central bank bought 130 tons of gold last year, increasing its holdings by 57 percent, to 359 tons.

In 2021, Glapiński announced a plan to expand the country’s gold reserves by 100 tons. The central bank reached that goal in September of ’23 and kept buying.

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