Gold buying by central banks around the world has slowed down, with only a handful of banks boosting their reserves despite a decline in prices during the summer, according to the latest data from the World Gold Council (WGC).

Central banks added a total of 20 tonnes to their reserves in August 2022, halving month-on-month. The largest buyer so far this year, Turkey, acquired another nine tonnes during the month, increasing its total gold purchases to 84 tonnes year-to-date and lifting its official reserves to 478 tonnes, the highest since the second quarter of 2020.

"Gold-related activity among central banks was muted in August," said Krishan Gopaul, senior analyst for EMEA at the World Gold Council.

"Only a handful of banks meaningfully contributed to the overall monthly total. Three banks published an increase to their gold reserves by a tonne or more, while there were no notable sellers by the same measure in the available data."

Considered a hedge against inflation and economic uncertainty, the precious metal has lost its shine recently, with prices falling by more than 14% over the last six months. Investors' appetite for safe-have assets have been curbed despite worries over ongoing geopolitical tensions and soaring inflation.

The yellow metal sunk to over a two-year low to just above $1,627 an ounce on September 25, the lowest since March 2020.

Other buyers

Aside from Turkey, Uzbekistan also purchased nine tonnes of gold in August, the same amount as the previous two months. This brings the country's year-to-date net purchases to more than 19 tonnes despite having sold nearly 25 tonnes in the first quarter of the year.

Uzbekistan's gold holdings now stand at more than 381 tonnes, accounting for 59% of total reserves. Another gold buyer, Kazakhstan added two tonnes to its reserves, bringing the total to just shy of 375 tonnes.

The Qatar Central Bank also suggested in a preliminary data a further addition to its gold reserves in August, but the World Gold Council said the precise tonnage has not yet been reported in the IMF IFS database.

The country had gold reserves of 72 tonnes at the end of July, up 16 tonnes (27%) since the start of the year.

According to Juan Carlos Artigas, global head of research at the World Gold Council, rising interest rates and a strong greenback "have had a significant negative effect" on the yellow metal.

"We believe gold's headwinds my start to subside while supportive factors will likely remain, thus encouraging demand for gold as a long-term investment hedge," Artigas said in a note last week.

(Reporting by Cleofe Maceda; editing by Seban Scaria)

cleofe.maceda@lseg.com