Central banks have become gold sellers for the first time since 2010 as some producing nations exploited near-record prices to soften the blow from the coronavirus pandemic, Bloomberg reported yesterday. Net sales totaled 12.1 tons of bullion in the third quarter, compared with purchases of 141.9 tons a year earlier, according to a report by the World Gold Council (WGC). Selling was driven by Uzbekistan and Turkey, while Russia’s central bank posted its first quarterly sale in 13 years, the WGC said.
While inflows into exchange-traded funds have driven gold’s advance in 2020, buying by central banks has helped underpin bullion in recent years. Citigroup Inc. last month predicted that central bank demand would rebound in 2021, after slowing this year from near-record purchases in both 2018 and 2019. “It’s not surprising that in the circumstances banks might look to their gold reserves,” said Louise Street, lead analyst at the WGC.
“Virtually all of the selling is from banks who buy from domestic sources taking advantage of the high gold price at a time when they are fiscally stretched.” The central banks of Turkey and Uzbekistan sold 22.3 tons and 34.9 tons of gold, respectively, in the third quarter, the WGC said. Uzbekistan has been diversifying international reserves away from gold as the central Asian nation unwinds decades of isolation.