Real Assets
Charted: 30 Years of Central Bank Gold Demand
30 Years of Central Bank Gold Demand
Did you know that nearly one-fifth of all the gold ever mined is held by central banks?
Besides investors and jewelry consumers, central banks are a major source of gold demand. In fact, in 2022, central banks snapped up gold at the fastest pace since 1967.
However, the record gold purchases of 2022 are in stark contrast to the 1990s and early 2000s, when central banks were net sellers of gold.
The above infographic uses data from the World Gold Council to show 30 years of central bank gold demand, highlighting how official attitudes toward gold have changed in the last 30 years.
Why Do Central Banks Buy Gold?
Gold plays an important role in the financial reserves of numerous nations. Here are three of the reasons why central banks hold gold:
- Balancing foreign exchange reserves
Central banks have long held gold as part of their reserves to manage risk from currency holdings and to promote stability during economic turmoil. - Hedging against fiat currencies
Gold offers a hedge against the eroding purchasing power of currencies (mainly the U.S. dollar) due to inflation. - Diversifying portfolios
Gold has an inverse correlation with the U.S. dollar. When the dollar falls in value, gold prices tend to rise, protecting central banks from volatility.
The Switch from Selling to Buying
In the 1990s and early 2000s, central banks were net sellers of gold.
There were several reasons behind the selling, including good macroeconomic conditions and a downward trend in gold prices. Due to strong economic growth, gold’s safe-haven properties were less valuable, and low returns made it unattractive as an investment.
Central bank attitudes toward gold started changing following the 1997 Asian financial crisis and then later, the 2007–08 financial crisis. Since 2010, central banks have been net buyers of gold on an annual basis.
Here’s a look at the 10 largest official buyers of gold from the end of 1999 to end of 2021:
Rank | Country | Amount of Gold Bought (tonnes) | % of All Buying |
---|---|---|---|
#1 | 🇷🇺 Russia | 1,888 | 28% |
#2 | 🇨🇳 China | 1,552 | 23% |
#3 | 🇹🇷 Türkiye | 541 | 8% |
#4 | 🇮🇳 India | 395 | 6% |
#5 | 🇰🇿 Kazakhstan | 345 | 5% |
#6 | 🇺🇿 Uzbekistan | 311 | 5% |
#7 | 🇸🇦 Saudi Arabia | 180 | 3% |
#8 | 🇹🇠Thailand | 168 | 2% |
#9 | 🇵🇱 Poland | 128 | 2% |
#10 | 🇲🇽 Mexico | 115 | 2% |
Total | 5,623 | 84% |
Source: IMF
The top 10 official buyers of gold between end-1999 and end-2021 represent 84% of all the gold bought by central banks during this period.
Russia and China—arguably the United States’ top geopolitical rivals—have been the largest gold buyers over the last two decades. Russia, in particular, accelerated its gold purchases after being hit by Western sanctions following its annexation of Crimea in 2014.
Interestingly, the majority of nations on the above list are emerging economies. These countries have likely been stockpiling gold to hedge against financial and geopolitical risks affecting currencies, primarily the U.S. dollar.
Meanwhile, European nations including Switzerland, France, Netherlands, and the UK were the largest sellers of gold between 1999 and 2021, under the Central Bank Gold Agreement (CBGA) framework.
Which Central Banks Bought Gold in 2022?
In 2022, central banks bought a record 1,136 tonnes of gold, worth around $70 billion.
Country | 2022 Gold Purchases (tonnes) | % of Total |
---|---|---|
🇹🇷 Türkiye | 148 | 13% |
🇨🇳 China | 62 | 5% |
🇪🇬 Egypt | 47 | 4% |
🇶🇦 Qatar | 33 | 3% |
🇮🇶 Iraq | 34 | 3% |
🇮🇳 India | 33 | 3% |
🇦🇪 UAE | 25 | 2% |
🇰🇬 Kyrgyzstan | 6 | 1% |
🇹🇯 Tajikistan | 4 | 0.4% |
🇪🇨 Ecuador | 3 | 0.3% |
🌍 Unreported | 741 | 65% |
Total | 1,136 | 100% |
TĂĽrkiye, experiencing 86% year-over-year inflation as of October 2022, was the largest buyer, adding 148 tonnes to its reserves. China continued its gold-buying spree with 62 tonnes added in the months of November and December, amid rising geopolitical tensions with the United States.
Overall, emerging markets continued the trend that started in the 2000s, accounting for the bulk of gold purchases. Meanwhile, a significant two-thirds, or 741 tonnes of official gold purchases were unreported in 2022.
According to analysts, unreported gold purchases are likely to have come from countries like China and Russia, who are looking to de-dollarize global trade to circumvent Western sanctions.
Real Assets
Visualizing Gold Consumption vs. Domestic Supply
India’s consumption is 50 times higher than its domestic supply.
Visualizing Gold Consumption vs. Domestic Supply
This was originally posted on our Voronoi app. Download the app for free on iOS or Android and discover incredible data-driven charts from a variety of trusted sources.
While India and China dominate the demand for gold, both countries face different scenarios when comparing supply gaps.
With its huge jewelry industry, India’s consumption is 50 times higher than its domestic supply. Meanwhile, China produces more than one-third of the gold it demands.
This graphic compares gold demand (in tonnes) versus domestic gold production in 10 selected countries. The data comes from the World Gold Council and was compiled by The Gold Bullion Company as of 2023.
India’s Massive Gold Market
Gold holds a central role in India’s culture, considered a store of value, a symbol of wealth and status, and a fundamental part of many rituals. The metal is especially auspicious in Hindu and Jain cultures.
With a population of over a billion, India tops our ranking with substantial gold demand, primarily for jewelry and gold bars.
Country | Gold Production in Tonnes (2023) | Gold Consumer Demand | Deficit or Surplus |
---|---|---|---|
🇮🇳 India | 15 | 748 | -733 |
🇨🇳 China | 378 | 910 | -532 |
🇹🇷 Turkey | 37 | 202 | -165 |
🇺🇸 United States | 167 | 249 | -82 |
🇧🇷 Brazil | 86 | 17 | 69 |
🇮🇩 Indonesia | 133 | 45 | 88 |
🇲🇽 Mexico | 127 | 15 | 112 |
🇨🇦 Canada | 192 | 24 | 168 |
🇷🇺 Russia | 322 | 71 | 251 |
🇦🇺 Australia | 294 | 24 | 270 |
China ranks second, with demand driven primarily by gold’s role as a store of value, especially by the People’s Bank of China. Central banks seek gold as a hedge against inflation and currency devaluation. Since 2022, the People’s Bank of China has increased its gold reserves by 316 tonnes.
In third place for gold demand, the U.S. consumed 249 tonnes in 2023, against a domestic supply of 167 tonnes.
Turkey ranks fourth, with mine production in 2023 at 37 tonnes, which is five times lower than its demand of 202 tonnes.
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To learn more about gold, check out this graphic that shows the value of gold bars in various sizes (as of Aug. 21, 2024).
Real Assets
Visualized: China’s Steel Demand Through Time
China’s steel demand remains robust, but the breakdown on a sectoral level has shifted since 2010. Which sectors are driving steel consumption?
Visualized: China’s Steel Demand Through Time
As the world’s manufacturing powerhouse, China has the highest global demand for crude steel, with the market experiencing remarkable growth since 2010.
In 2023, China’s crude steel demand reached 911 million metric tons. This is up an estimated 50% from 609 million metric tons 13 years earlier. When adding in exports and changes to inventory, China surpassed 1 billion metric tons of steel production for the fifth year in a row.
However, the growth in demand for the metal has not been even across industries. In this graphic, we’ve partnered with BHP to visualize how demand for steel on a sectoral level has shifted between 2010 and 2023.
The Sectors Driving Steel Demand
We observed demand for crude steel across the following sectors:
- Machinery: machinery used in power, construction, metals and mining, agriculture, tools and parts, etc.
- Infrastructure: roads, railways, subways, pipelines, etc.
- Construction: urban and rural housing, office buildings, industrial buildings, WRAC buildings (wholesale, retail, accommodation, catering), etc.
- Transport: light-duty vehicles, trucks and buses, auto parts, shipbuilding, etc.
- Consumer Durable Goods: refrigerators, washing machines, air conditioners, microwaves, etc.
- Metal Goods: containers and hardware, etc.
- Other: smaller categories, statistical change, etc.
In 2010, the largest share of Chinese demand came from the construction sector. Construction accounted for an estimated 42% of the country’s total steel needs. Machinery (20%) and infrastructure (13%) were the industries with the second- and third-highest demand, respectively.
Over the past 13 years, however, demand has shifted towards the machinery and infrastructure industries.
Sector | 2010 (%) | 2023 (%) |
---|---|---|
Machinery | 20 | 30 |
Infrastructure | 13 | 17 |
Construction | 42 | 24 |
Transport | 12 | 9 |
Durable Goods | 7 | 8 |
Other | 6 | 12 |
The demand for steel from the construction industry is estimated to have dropped from 42% of total demand to 24%, as construction firms purchased 37 million metric tons less steel in 2023 compared to 2010. This slump can, in part, be attributed to the Chinese real estate crisis and developer bankruptcies. Both of these factors led to a slowdown in residential building starts.
The machinery sector, on the other hand, has witnessed incredible growth. It rose from an estimated 20% share of overall Chinese steel demand in 2010 to 30% by 2023, boosted by an influx of equipment renewals. Infrastructure saw approximate growth of 13% to 17% over this timeframe.
Steel Demand for Transportation and Durable Goods
The share of steel used by the transport sector is estimated to have falled from 12% in 2010 to 9% in 2023. However, there was an uptick in the amount of steel used by the industry. It rose from around 73 million metric tons in 2010 to 82 million metric tons 13 years later. And, with more than half of all new electric vehicles (EVs) sold worldwide made in China, the sector could receive support if EVs continue to gain in popularity.
In fact, the green economy needs the steel industry—it remains vital for the production of emerging technologies. As such, it is important that nations take steps towards “cleaning” their steel industries. China is doing so with its focus on carbon capture, utilization, and storage technologies, employing green hydrogen metallurgy, and introducing electric furnaces.
Steel demand for durable goods rose slightly from 2010 to 2023. However, the relatively steady share masks the near-doubling of absolute steel purchased by this sector—up from 43 million metric tons to an estimated 73 million metric tons.
The Path Forward for Steel
The Chinese steel industry remains robust—growing by an estimated 50% from 2010 to 2023—despite significant shifts beneath the surface.
As the energy transition progresses, further changes in industry demand for steel are likely, especially with the increasing prominence of clean technologies, such as EVs. Conversely, demand from the construction industry remains closely tied to the outlook of the country’s housing sector.
BHP is one of the world’s leading iron ore producers. Read more insights in its economic and commodity outlook report.
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