Central banks around the world started the year by building up their gold holdings as they continue to see the precious metal as a reserve asset. 

In January 2023, central banks added a total of 31 tonnes to their reserves, up by 16% from the previous month, the World Gold Council (WGC) reported on Thursday. 

“Central banks gold demand in 2023 picked up from where it left off in 2022.…[The increase was] comfortably within the 20-60-tonne range of reported purchases which has been in place over the last 10 consecutive months of net buying,” said Krishan Gopaul, Senior Analyst of the World Gold Council. 

Turkey was the biggest buyer for the month, adding 23 tonnes to its official gold reserves, which now stand at 565 tonnes. China also acquired 15 tonnes on top of the 62 tonnes of gold acquired between November and December 2022. 

There were no reported purchases for the UAE in January, although the Gulf state added a total of 19.5 tonnes to its reserves in 2022. In December 2022, the UAE had 75 tonnes of gold, representing 3.3% of the global holdings and up by around 1.5% from its total reserves as of October 2022 . 

Gold reserves of the European Central Bank (ECB) went up by 2 tonnes in January, but the addition was not an outright purchase by the bank. “This was related to Croatia joining the currency union, as the country was required to transfer the gold, as part of a larger transfer of reserve assets, to the ECB,” Gopaul said. 

Looking ahead, the World Gold Council expects central banks to remain positive towards the yellow metal and continue to boost their holdings this year. 

“However, by how much is difficult to call, as evidenced by our expectations at the start of 2022. But it is also reasonable to believe that central bank demand in 2023 may struggle to reach the level it did last year,” Gopaul said. 

“The healthy January data we have so far gives us little reason, at this time at least, to deviate from this outlook either.” 

As of 9:17am, spot gold was up 0.06% at $1,838.99 an ounce. On the first day of February, the precious metal traded at $1,949 an ounce, the highest since April 2022. 

(Reporting by Cleofe Maceda; editing by Seban Scaria)