PBOC, MAS drive central bank gold purchases in 2023

The sustained pace of central bank purchases is unexpected and the trend could continue in the months ahead amid growing geopolitical tensions and a clouded economic outlook, said experts.
PBOC, MAS drive central bank gold purchases in 2023

Central banks in China, Poland and Singapore emerged as the top three buyers of gold in 2023, with China maintaining the lead in the third quarter as well, according to newly-released data from the World Gold Council.

The People’s Bank of China (PBoC) claimed the title of the largest buyer globally, increasing its gold reserves by 78 tonnes during the quarter, according to the World Gold Council.

Since the start of the year, the PBoC has increased its gold holdings by 181 tonnes, to 2,192 tonnes (equivalent to 4% of total reserves) since the start of the year.

The Monetary Authority of Singapore (MAS) was another significant buyer this year, buying about 9 tonnes during the quarter and about 75 tonnes cumulatively in the first nine months.

Despite those purchases, gold holdings account for less than 2% of the Singaporean central bank's official foreign reserves.

Shaokai Fan
World Gold Council

AsianInvestor has regularly covered MAS’s gold purchases through this year.


“The sustained scale of central bank purchases was unexpected,” said Shaokai Fan, head of Asia Pacific (ex-China) and global head of central banks, at the World Gold Council, told AsianInvestor.

"While we always thought that central banks would continue to buy in 2023, we did not think that the scale of purchases would continue to be on par with the colossal level of buying seen in 2022. This illustrates the continued value that central banks attach to gold reserves, especially in increasingly uncertain times.”

Central banks globally bought about 800 tonnes of gold in the nine months to September, with 337 tonnes purchased in the third quarter, according to the council.


China’s purchases, in particular, made news in the third quarter when the precious metal traded on the Shanghai Gold Exchange at a very high premium of $120 an ounce, vastly higher than the usual range of $5 to $15 an ounce.

Investors sold the yuan as disappointing economic data and real estate troubles pushed the central bank to cut rates – diverging with the rest of the global economy – and weakened the currency’s value offshore.

Even as the central bank intervened to stop the currency slide by limiting gold imports, quarterly investment demand for gold bars and coins from Chinese households soared to a high of 82 tonnes during the quarter -- the strongest level since Q1 2021.

“Our view is the Shanghai gold premium was caused by a lack of supply coming onshore due to import restrictions as well as a pickup in Chinese wholesale demand. Heightened demand for gold from central banks around the world certainly impacted global gold demand and may have led to tighter supply conditions flowing from offshore into China,” said Fan.

The overall investment demand exemplified gold’s appeal as a wealth-preserving store of value amid a lack of local attractive alternative options.


China's central bank is expected to keep buying the yellow metal.

"We believe the PBOC’s gold buying is a long-term plan to diversify its reserves away from US assets, noted  Alex Chiu, senior strategist, ETF business at Value Partners.

China has been selling off large amounts of US Treasury bonds over the past few quarters, he told AsianInvestor.

"We expect this  [gold purchasing] trend to continue amid the current environment of deglobalisation and rising geopolitical tensions," Chiu said, adding that rising gold exposure could also improve the credibility of the renminbi as a reserve or trade-settlement currency.

Central banks in India and the Philippines were the other significant Asian buyers of the shiny metal in 2023.

The Reserve Bank of India purchased 9 tonnes in the third quarter and a total of 19 tonnes in 2023.

Bangko Sentral ng Pilipinas bought 2 tonnes in the third quarter, bringing its total purchases so far this year to 6 tonnes, according to WGC data.


The price of the shiny metal has stayed relatively high for most of 2023, on the back of concerns that large developed economies were ‘behind the curve’ on controlling inflation, despite rate hikes over 2022 and this year.

The price of gold averaged $1,928.5 per troy ounce in the third quarter, according to the World Gold Council. One troy ounce is equivalent to 31.1 grams.

Wei Li
BNP Paribas AM

Ongoing regional tensions have sent the gold price higher, said Fan. “If these tensions broaden or intensify, then there is a case for gold to continue to react as a safe haven.”

Value Partners' Chui also said his team is generally constructive on gold prices over the next six months.

Wei Li, portfolio manager, multi asset quant solutions at BNP Paribas Asset Management, had a slightly different take: 

"Gold has shown the most significant response to Middle East tensions compared to other energy-related assets, experiencing an over 8% price increase since early October," he said.

"However, the market suggests that this time the potential for gold price growth is not as high as during the initial stages of the Ukrainian war," Li told AsianInvestor.









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