Why Central Banks Suddenly Sold Gold After 3 Years Of Relentless Buying | Kavita Chacko | ET Now

Added: 2026-06-03

[00:00:00]talk and touch base with World Gold Council. We have Kavita Chacko, research head India at World Gold Council now joining us. And we have a very special interesting conversation lined up because March saw the first month of net central bank gold selling after 3 years of aggressive buying. And World Gold Council has come up with this interesting data on what led to this.

[00:00:21]Kavita, how do you read into this selling that was done by central banks globally in the month of March, the first such instance that we have seen in the last many years?

[00:00:29]>> Yeah. Hi Ashisha. Thanks for having me.

[00:00:32]So, coming to March, this was largely led by two central banks, namely Turkey and Russia. And Turkey sold close to 60 tons of gold. And that was mainly to take care of their forex reserves as well as liquidity issues. So, this was a kind of tactical in nature. But if you're looking at the other central banks, you had a buying interest still being retained when it comes to central banks. And most of these central banks were from Eastern Europe or even other Asian countries.

[00:01:07]So, besides even Russia had undertaken some sales of gold reserves. This is more to do with their domestic conditions, be it liquidity or foreign exchange reserve concerns. But what we have been seeing based on our early readings of April, central bank have resumed buying on a net basis. We are seeing positive flows and this is based on publicly available information. So, yes, central bank interest remains.

[00:01:36]>> Okay, so the interest from central banks remain. And despite the selling that we've seen in the month of March, you're telling us that the trend has perhaps reversed in the month of April yet again. And central banks have again started buying. But since you were talking about two countries, one is Turkey and the other one is Russia.

[00:01:52]These were the main two countries which uh contributed to that sell figure in the month of March? For Turkey in particular, what accounted for the bulk of the selling? What was this driven by?

[00:02:04]What was the main reason?

[00:02:06]>> It is mainly post the you know, as a reaction to the Iranian US tensions, you had liquidity concerns there as well as to maintain their foreign exchange reserves. So, currency as well as liquidity concerns. It is to maintain these that uh you know, you had gold selling which happened around that time.

[00:02:27]>> Right, understood. Uh so, two countries that majorly contributed to the selling in the month of March, one is Turkey, another one is Russia. And we also understood the factors which led to that. Uh but one of the main reasons which has led to an up move in gold prices, one of course is everything that is happening on geopolitical front, but second is also central bank buying that's been over the last few years.

[00:02:48]Now, going forward, how significant is central bank buying in your opinion uh to help uh that next leg of up move when it when we talk about gold prices?

[00:02:59]>> The central banks have been in the last three to four years been major contributors to the overall gold demand.

[00:03:06]And we expect that trend to continue. If you are looking at the interest in central bank buying across countries, we see that trend persisting.

[00:03:17]Even some of our surveys have indicated the same that, you know, over 95% of the central bank respondents who have been participating in our survey have said that they do not foresee a reduction in their central bank reserves.

[00:03:30]So, this trend is likely to continue.

[00:03:33]And we have also seen that going by the pace of buying by the various central banks, the interest is still there. And the central bank buying continues to be quite strong.

[00:03:45]>> Central bank buying continues to remain very strong. That's the view coming in.

[00:03:49]Which countries or which central banks in your opinion are likely to aid central bank buying going forward if you have done some back of the envelope working at World Gold Council?

[00:04:00]>> What we have seen so far is it's mainly countries central banks such as Poland, Kazakhstan, Uzbekistan, which have been the major buyers. Even China has been a large contributor to the central bank demand. So and this this trend has been persisting for various months by the central banks. So we expect that to continue.

[00:04:22]>> So central bank buying is likely to continue. Have you done any analysis on where gold prices are headed? What is World Gold Council's estimate on whether sustainability whether gold prices are likely to sustain going forward at elevated levels?

[00:04:38]>> At World Gold Council, we do not have any price projections.

[00:04:42]>> Okay, no price projections, but directionally speaking, I understand you can't give a number, but directionally do you expect the up move to continue?

[00:04:51]>> Even directionally we we do not provide it, but we we do understand that you know this there are fundamental factors which will help support the prices as well as gold demand.

[00:05:03]>> And when we talk about investment demand versus consumption demand as a consequence of surge in gold prices that we have seen globally, has consumption demand fallen both in India as well as in the global market?

[00:05:15]>> So what we have been seeing is that when you say talk about consumption demand, we also look at bar and coin investment as well as jewelry demand. And what we have been seeing in the last few quarters is that there has been an increasing interest in bar and coin demand. And this is at the expense of jewelry demand. So yes, there has been an interest towards investments.

[00:05:38]>> [snorts] >> And that trend is likely to persist given that the price because of the price increase, there is an interest towards you know having more of the investment demand here.

[00:05:51]>> And this is a doubt as far as the investment demand is concerned and that is likely to continue. That's the word coming in from World Gold Council.

[00:05:57]Kavitha, thank you so much for taking your time out and joining us here in ET now. And the clear sense is that the buying by central banks which has happened over the last few years is likely to continue going forward as well. Meanwhile, we also have a Reserve Bank of India which has issued a clarification on some reports stating that physical stock of gold continues to remain unchanged at 880.5 trillion. Physical stock was disclosed regularly in the monthly bulletin. And the Reserve Bank of India has said that we should rely only on official information. There were some reports that suggested that perhaps the physical stock has fallen, but Reserve Bank of India clearly has said that these reports are incorrect. On that note, we need to slip into a very short break, but more news and updates will continue on the other side.

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