Central-bank gold buying estimate draws wider notice as reserves move to London

With speculative selling having pulled gold under $4,000, strong buying from the official sector is providing a structural support beneath the market, reinforcing the notion that long-term investors are absorbing setbacks. That does not mean a hard floor is in place, though: oil, bond yields and Federal Reserve policy expectations still dictate the near-term path, and central-bank demand did not stop the decline last week. Because Goldman's flow-derived figure exceeds the level of purchases that have been reported officially, actual accumulation may be understated, a point with implications for the supply-demand picture over time. The movement of bullion out of New York and into London is more a story about reserve management than about an immediate price catalyst, yet it feeds into questions about the dollar's position within official reserves.

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Earlier reports:

• Saxo Bank: long liquidation swamps ETF buying as gold slips below $4,000
• Oil stokes Fed hike worries as gold posts worst week in four months below $4,000

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Central banks, in contrast to the speculators offloading gold, have been quietly accumulating at several times their usual pace, and a few now prefer London over New York as a storage site.

Key points:

• Goldman Sachs puts August official-sector buying at 79 tonnes, a figure more than four times the 17-tonne monthly average seen before 2022 and above the bank's July estimate of 44 tonnes
• On a three-month seasonally adjusted basis, central-bank purchases amount to roughly 85 tonnes a month, with China the biggest buyer that could be identified, at an estimated 25 tonnes, exceeding the approximately 20 tonnes it reported
• investingLive first reported the estimate on October 19, and Fortune gave it broader exposure last week
• Over the period, the Federal Reserve Bank of New York held 40 tonnes less, the Bank of England held 46 tonnes more, and the Dutch central bank transferred 86 tonnes from New York and Ottawa to London
• Goldman continues to describe central-bank buying as structural support for gold even with the metal trading below $4,000

Central banks have stepped up gold purchases to more than four times their historical rate, and they are also relocating part of their reserves out of the United States — a development identified in Goldman Sachs research that has lately been gaining notice.

investingLive reported on October 19 that Goldman Sachs calculates central banks acquired 79 tonnes of gold in August, a figure far beyond the 17-tonne monthly norm that prevailed before 2022 and a clear jump from the 44 tonnes the bank estimated for July. On a three-month seasonally adjusted basis, buying is around 85 tonnes a month. China, at an estimated 25 tonnes, was the largest purchaser that could be singled out, above the roughly 20 tonnes that the People's Bank of China has formally recorded. Fortune picked up the numbers last week, describing central banks as quietly stockpiling bullion at four times the regular pace.

Rather than leaning only on official disclosures, Goldman derives its estimate from trade and flow data. That helps account for why the figure sits well above the World Gold Council's tally of reported net central-bank purchases for August, and it matches the bank's assessment that certain buyers, especially China, are buying in volumes that exceed what is recorded officially.

Where the gold sits is the other element of the picture. Over that stretch, the Federal Reserve Bank of New York saw its gold holdings fall by 40 tonnes, while those at the Bank of England rose by 46, pointing to a move in storage from New York to London. Separately, the Dutch central bank confirmed that it took six months to transfer 86 tonnes of gold from New York and Ottawa to London. Because those transfers involve gold already held, they do not create fresh demand.

Goldman still regards central-bank demand as a structural underpinning for gold, not a temporary shift. The context stands out because bullion dropped under $4,000 last week, pressured by speculative liquidation, elevated crude prices and worries about interest rates. The official-sector figures point to continued accumulation by long-term buyers even while short-term positioning was being cut back.