For more than a decade now, the world’s central banks have been net purchasers of gold for their official reserves, providing important support for the price of the metal. The buying, mostly by emerging-market (EM) central banks, has accounted for between 10% and 15% of total global demand. What is the outlook for this source of demand, and how long might it continue? Conversely, are there any potential central bank sellers lurking out there?
For insight into current central-bank sentiment and clues about how that may or may not change in the future, we looked at the World Gold Council’s annual central bank survey. In this year’s report, the number of central bank respondents that expect their own country’s official gold reserves to increase over the next 12 months was 25%, up from 21% a year ago. In addition, 61% of respondents believe global gold reserves will increase over the same period (see Chart 1).