Central banks continue to buy gold, investors buy less

While central banks have been buying gold unabated for years, private individuals are increasingly failing to do so, according to the latest Quarterly report that the World Gold Council released this week.

Central banks added 116.5 tonnes to their reserves in the first three months of this year, about the same as the quarterly average since the beginning of 2010. Meanwhile, global demand for gold coins and gold bars for consumers fell by 15% to 254.9 tonnes.

These figures are indicative of the latest trend in the gold market. Central banks that are based on a strategic or political perspective Buy gold continue to add precious metal to their reserves this year, while the more price-conscious investors and savers are more likely to ignore the precious metal due to the ailing price. In the United States in particular, sales figures have fallen sharply.

Gold price was relatively stable compared to equities (Source: World Gold Council)

Selling coins and bars drops

It is striking that demand in countries such as China and India also fell somewhat in the first quarter, by 26 and 13 percent respectively compared to the first quarter of last year. It should be added, however, that the first quarter of 2017 was particularly strong as a result of a strong increase in the price of gold. In the first three months of this year, there was less movement in the Gold price, which has undoubtedly had a negative impact on the demand for investment gold.

In Europe and the United States, there has also been less interest in precious metals in recent months. In the United States, only 3.7 tonnes of coins and bars were traded in the first quarter of this year, the lowest level since the beginning of 2008. The sudden volatility in the U.S. stock market in February also didn't have much of an impact on demand for the precious metal. On the European market, demand fell by 39% to 39.8 tonnes as a result of positive figures on economic growth and the relatively strong euro.

The World Gold Council notes that there are fewer Gold Coins have been minted due to a growing supply of old investment coins. For example, many Krugerrand coins came over from the United States, looking for buyers in Europe. There were also countries where the demand for the precious metal did increase. In Turkey and Iran, a depreciation of their own currencies caused a flight to the precious metal. Sales were also up in Thailand and Vietnam, where demand rose by four and five percent respectively in the first quarter.

Central banks continue to buy gold

Central banks paid little attention to price developments and continued to add precious metals to reserves. Russia added 41.7 tonnes to its stock in the first quarter, while Turkey's gold reserve grew by 29.8 tonnes. Kazakhstan already bought 9.1 tonnes this year and now has 310.1 tonnes in the vault. These three countries are responsible for almost half of all global purchases of precious metals by central banks over the past five years.

Central banks continue to buy gold (Source: World Gold Council)