The gold buying of the central bank was able to hit its highest level ever since 2015 in the third quarter as the demand increased amid the stock market volatility and currency weakness.
It was reported by the World Gold Council that the central bank gold reserves rose by 148.4 tonnes, up by 22 percent year-on-year as more countries bought the said commodity.
A four-month trend of the outflows of gold was also reversed last October as the European and US markets plunged, causing some investors to return to the commodity as a “safe haven” in order to protect assets.
The director of market intelligence at the World Gold Council, Alistair Hewitt, said that regular buyers such as Kazakhstan, Turkey, and Russia continued to purchase gold. It also said that a number of new buyers, including Hungary, India, and Poland had greatly contributed to the demand.
The demand for gold bars and coins in Iran increased to a five-and-a-half year high as the sanctions of the United States and the plummeting rial caused the investors to look for some refuge in gold.
Lower prices of gold also saw the retail investors around the globe to buy bars and coins, while jewellery purchases increase in China and India.
Overall, the demand for gold was steady, up by only six tonnes year-on-year as the consumer demand and central bank buying gains were offset by large outflows in gold-back exchange-traded funds.
However, the large outflows that were led by resurgent markets came to an end and were reversed last October after the global equity sell-off.
Hewitt stated: “The physical market responded quickly when the gold price breached US$1,200/oz in August, with retail investors around the world diving into the market.”
He added: “And there are welcome developments in the central bank space. They’re buying a lot and we are seeing new central banks enter the market as they look to hedge their dollar exposure.”
He continued: “The equity sell-off last week is a timely reminder of the threats stalking markets: valuations are stretched, debt levels are high, and rising rates and quantitative tightening pose risks that an allocation to gold can help hedge.”