Heavy official-sector buying offers a structural cushion beneath gold just as speculative liquidation has dragged prices below $4,000, and it supports the argument that dips are being absorbed by long-term buyers. It does not guarantee a floor, however: near-term direction still depends on oil, yields and Fed expectations, and central bank demand did not prevent last week’s slide. The gap between Goldman’s flow-based estimate and officially reported purchases suggests accumulation may be larger than disclosed, which matters for the longer-run supply-demand balance. The shift of holdings from New York to London is a reserve-management story rather than an immediate price driver, but it adds to debate over the dollar’s role in official portfolios.
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Earlier:
Gold dips below $4,000 as long liquidation swamps ETF buying, Saxo Bank says
Gold dips below $4,000 in worst week in four months as oil fuels Fed hike fears
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While speculators dump gold, central banks are quietly buying it at a multiple of their old pace, and some are deciding they would rather keep it in London than New York.
Summary:
Goldman Sachs estimates central banks bought 79 tonnes of gold in August, more than four times the pre-2022 average of 17 tonnes a month, and up from its 44-tonne estimate for July
On a three-month seasonally adjusted basis, purchases are running at about 85 tonnes a month; China was the largest identifiable buyer at an estimated 25 tonnes, above the roughly 20 tonnes it reported
The estimate, first reported by investingLive on October 19, gained wider attention after Fortune highlighted it last week
Holdings at the New York Fed fell by 40 tonnes while those at the Bank of England rose 46; the Dutch central bank moved 86 tonnes out of New York and Ottawa to London
Goldman views central bank demand as a structural support for gold, even as prices have fallen below $4,000
Central banks are buying gold at more than four times their historical pace and shifting some of their holdings out of the United States, a trend first flagged by Goldman Sachs research that is now attracting wider attention.
As investingLive reported on October 19, Goldman Sachs estimates that central banks bought 79 tonnes of gold in August, well above the pre-2022 average of 17 tonnes a month and a sharp step up from the bank’s 44-tonne estimate for July. On a three-month seasonally adjusted basis, purchases are running at around 85 tonnes a month. China was the largest identifiable buyer, with an estimated 25 tonnes, above the roughly 20 tonnes officially reported by the People’s Bank of China. The findings were picked up last week by Fortune, which framed them as central banks quietly stockpiling gold at four times the usual rate.
Goldman builds its estimate from trade and flow data rather than relying solely on official disclosures. That helps explain why it runs well above the World Gold Council’s count of reported net central bank purchases for August, and it is consistent with the bank’s view that some buying, particularly by China, is running ahead of official figures.
The second part of the story is where the gold is held. Holdings at the Federal Reserve Bank of New York fell by 40 tonnes over the period, while those at the Bank of England rose by 46 tonnes, pointing to a shift in storage from New York to London. The Dutch central bank separately confirmed it spent six months moving 86 tonnes of gold out of New York and Ottawa to London. Those transfers relocate existing reserves rather than adding new demand.
Goldman continues to see central bank buying as a structural support for the gold market rather than a passing phase. That backdrop is notable given recent price action, with gold falling below $4,000 last week as speculative selling, higher oil prices and rate concerns weighed. The official-sector data suggest long-term buyers have kept accumulating even as short-term positioning has been unwound.
This article was written by Eamonn Sheridan at investinglive.com.
