China buys gold for two straight years as central bank demand remains a key pillar of support

(Kitco News) - After a busy third quarter, central banks continue to take advantage of lower gold prices to increase their official reserves. China continues to play a dominant role in the marketplace, increasing its reserves for two straight years.In social media posts highlighting October purchases, Krishan Gopaul, Senior Analyst, EMEA, at the World Gold Council, said that China bought 26 tonnes of gold, putting the nation’s official reserves on nearly equal footing with those of other developed nations.“Gold holdings now total 2,435 tonnes. This is now 2 tonnes behind France’s gold reserves,” he said.Although China has had a commanding presence in the gold market, Gopaul noted that the nation is not alone.The Czech National Bank bought 2.5 tonnes last month.“Total gold holdings now stand at 90 tonnes, just 10 tonnes shy of its stated 100-tonne target,” he said.Gopaul also noted that the Central Bank of the Republic of Uzbekistan bought 7 tonnes of gold in October.“This lifts its total YTD net purchases to 63 tonnes, and total gold holdings to 453 tonnes,” he said.Last week, the National Bank of Poland announced that it had reached its target of increasing its official reserves to 700 tonnes. Gopaul calculated that the central bank bought 27 tonnes of gold in October.Although Poland has reached its initial goal, Governor Adam Glapinski left the door open to further purchases.“You ask what comes after these 700 tons. We need to sit down and think it through calmly. I see no reason why we should stop buying gold,” Glapinski said. “I believe that our gold reserves should grow in line with our overall reserves.”The buying activity in October follows a busy summer. Last week, the World Gold Council reported that central banks purchased 321 tonnes of gold in the third quarter, an increase of 42% compared to the same period last year and well above the five-year quarterly average of 227 tonnes.The WGC said that it expects central banks to remain active participants in the gold market through the rest of the year.“Central bank demand exceeded expectations in Q3, while the modest upward revision to Q2 reiterates the strength of official sector buying. This is consistent with the strategic interest captured in our surveys and suggests that demand is likely to remain firm in Q4,” the analysts said in last week’s quarterly demand trends report. “Purchases nevertheless appear sensitive to price. This pattern could provide some price support and stability, although the relationship is not sufficiently stable to imply a firm floor for the gold price.”See live precious metals prices for gold, silver, platinum and palladium — in USD, CAD and 12 more currencies.

China buys gold for two straight years as central bank demand remains a key pillar of support

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