Central banks make biggest gold buy in decades

Central banks made their largest purchases of gold in decades in the third quarter, as a sharp drop in prices in September accelerated the shift to bullion as a means of diversification. The scale of the buying, at 148.4 tonnes on a net basis, will come as a surprise to many traders as it is a long way beyond the purchases that had previously been disclosed. The data were published in a quarterly report by the World Gold Council, a lobby group for the gold industry, on Thursday morning. The WGC declined to detail the identity of the central banks behind the majority of the buying citing “confidentiality restrictions”, saying only that “a slew of new entrants emerged wishing to bolster gold holdings”.

The activity of central banks is one of the most important drivers of the gold market, but many banks disclose few details about the changes in their bullion reserves. GFMS last month said that central bank purchases were likely to be in excess of 400 tonnes and could reach 500 tonnes, an upward revision from its forecast in September of 336 tonnes of buying for the year. Elsewhere, the WGC reported that China overtook India to become the largest consumer of gold jewellery in the third quarter. Chinese jewellery consumption rose 13 per cent from a year earlier to 138.6 tonnes, while buying from India - traditionally the world’s top consumer - fell 26 per cent.

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