Global Central Banks' Gold Demand in Q2 2024

In the face of ongoing economic uncertainties, central banks continue to play a pivotal role in supporting global gold demand. Their purchasing behavior, which reached record levels over the past few years, remains a significant force in stabilizing gold prices and reinforcing the metal's status as a reliable safe-haven asset.

During the second quarter of 2024, central banks sustained their interest in gold, although their purchasing activity began to slow. After a landmark 2022, when net purchases reached a historic high of 1,082 tonnes, and a robust follow-up in 2023 with over 1,000 tonnes, the pace of buying in 2024 has moderated. In Q2, net purchases by the official sector were estimated at 183 tonnes—down 39% from the 300 tonnes recorded in Q1 2024.

Despite this deceleration, the numbers remain impressive by historical standards. The Q2 total was still 44% higher than the average quarterly purchases during the 2010s, indicating that central banks continue to prioritize gold in their reserve strategies. The first half of 2024 saw a cumulative total of over 480 tonnes, marking the highest H1 figure on record and positioning this period as the third-highest half-yearly total since 2010.

The reduction in central bank gold buying is partly attributed to the sharp rise in gold prices from March 2024 onward. While central banks are typically less swayed by short-term price movements, the rapid appreciation of gold likely encouraged a more cautious approach to further acquisitions. Additionally, even with a slower pace of buying, the increasing value of gold has naturally boosted its share within many countries' international reserves, contributing to the observed slowdown.

Looking forward to the remainder of 2024, it's anticipated that central banks will continue to purchase gold, though at a more measured pace. The expected annual total for 2024 is projected to be around 800 tonnes—a figure that, while lower than the extraordinary levels of the past two years, still represents a substantial 57% increase over the average annual purchases during the 2010s.

The consistent demand from central banks has been crucial in offsetting the structural surplus in the gold market, providing a buffer that has helped to stabilize prices even as investor sentiment fluctuates. This enduring trend underscores the strategic importance of gold in central bank reserves, reflecting its long-standing value as a hedge against economic volatility.

The sustained demand for gold by central banks highlights the metal’s critical role in preserving financial stability. For individual investors, this serves as a compelling case for adding gold bullion coins to their portfolios. By investing in physical gold, individuals can not only protect their wealth against economic fluctuations but also align themselves with the strategic decisions of the world’s leading financial institutions.