Central banks are buying a record amount of gold in the third quarter and large chunks are coming from unknown buyers

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(Kitco News) Gold purchases from central banks hit a record high in the last quarter, the World Gold Council’s quarterly report showed. But the caveat was that the big players remain anonymous.

In total, almost 400 tons were bought by central banks in the third quarter, the most on record. It also marked a 300% jump from the same period a year ago, the World Gold Council said in its report on gold demand trends released on Tuesday.

Year-to-date, central banks have bought 673 tonnes, more than any annual total since 1967 – when the US dollar was still backed by gold.

Turkey, Uzbekistan and Qatar have become the biggest known buyers. But there was still a large unknown contingent. “The level of official sector demand in the third quarter is the combination of steady reported buying by central banks and a substantial estimate of unreported buying,” the WGC report said.

Countries notorious for not regularly reporting their gold purchases are China and Russia.

“Not all official institutions publicly report their gold holdings or may do so with a lag. started earlier in the year,” the report noted.

From what is known, emerging market banks are leading the pack in official gold purchases.

Turkey bought 31 tons of gold in the third quarter, which increased its gold reserves to 489 tons. Uzbekistan has been a consistent buyer and added 26 tonnes to its gold reserves in the last quarter. And the Central Bank of Qatar increased its activity, buying 15 tonnes of gold in July, its biggest monthly acquisition on record, according to the report.

The biggest net seller in the third quarter was Kazakhstan, which reduced its gold reserves by 2 tonnes. “It is not uncommon for central banks buying gold from domestic sources to oscillate between buying and selling,” the WGC said.

Click here to view other parts of the WGC report.

Record gold purchases by central banks contrast with what happened with the price of gold. The precious metal has fallen for seven consecutive months in response to aggressive Federal Reserve tightening that is pushing the dollar and US Treasury yields higher.

Seven consecutive months of losses have not been seen in the gold market for more than five decades.

Additionally, strong outflows from gold-backed ETFs have weighed heavily on prices, and many analysts don’t see the trend changing until there is some kind of pivot from the Fed.

For example, Standard Chartered is looking for continued outflows from gold-backed ETFs for the rest of the year and a small net inflow next year. “The turning point comes when the Fed pivots. Dollar strength is likely to persist over the coming months,” Suki Cooper, executive director of precious metals research at Standard Chartered, said in a recent webinar.

At the time of writing, December Comex gold futures were trading at $1,653.20, up 0.76% on the day.

Disclaimer: The opinions expressed in this article are those of the author and may not reflect those of Kitco Metals Inc. The author has made every effort to ensure the accuracy of the information provided; however, neither Kitco Metals Inc. nor the author can guarantee such accuracy. This article is strictly for informational purposes only. This is not a solicitation to trade commodities, securities or other financial instruments. Kitco Metals Inc. and the author of this article accept no responsibility for loss and/or damage resulting from the use of this publication.

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