Central banks around the world bought roughly 800 metric tons of gold this year through September, 14 percent more than during the same period in 2022 to set a new record, according to the World Gold Council, a rate the council called “voracious.”

Total gold purchases for all of 2023 could surpass last year’s record of 1,081 metric tons, the council said.

Central banks have been using gold as a hedge against inflation and as a store of value as some countries’ currencies have been sliding against the dollar. 

Many countries also have been stockpiling the precious metal as a means of reducing dependence on the dollar after the U.S. included foreign exchange markets in its sanctions against Russia as punishment for invading Ukraine.

Nations’ lust for gold has kept the price close to $2,000 per ounce since July. The Mideast war jacked the price an additional 10 percent in the 16 days following Hamas’s attack on Israel.

China led the gold rush, buying 181 tons and raising gold’s share of its central bank reserves to 4 percent.

Poland took second place in line with 57 tons, followed by Turkey, which bought 39 tons. Eight central banks followed with purchases of more than a ton each.

Central banks report gold purchases to the International Monetary Fund. However, not all purchases are reported, the Financial Times noted.

As much as 129 tons went unreported during this year’s third quarter, according to the gold council, which monitors international traffic in the metal. 

That would bring the total of central bank purchases for the quarter to 337 tons, which would be more than twice the second-quarter total but 27 percent below that of the same quarter in 2022, the FT noted.

TREND FORECAST: We remain bullish on gold.

Wars in Europe and the Mideast, high interest rates slowing the world’s economy, and inflation still picking people’s pockets will keep gold front and center as a safe haven for value for the foreseeable future.

Central banks’ stronger appetite for gold also signals a continuation of the gradual “Death of the Dollar,” a trend we have documented in articles such as “Yuan Replaces Dollar as Most-Used Currency in China’s Foreign Trade” and “Argentina Switches From Dollar to Yuan, Taps China Swap Lines Amid Peso Crisis” (both 2 May 2023).

The dollar will continue to lose its prime place as the currency of international trade as supply chains are reorganized more tightly around existing political and economic alliances and as the U.S. continues to use foreign exchange markets as a bludgeon to punish countries it opposes. 

Also, to make it simply clear; when the U.S. lowers interest rates the dollar will decline and the lower the dollar falls, the higher gold prices will rise.

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