Central banks added 79 tonnes of gold in August, Goldman Sachs says

Gold benefits from consistent central bank buying, a type of demand that is typically less price-sensitive compared with investor flows. This can soften the impact of selloffs driven by speculative or ETF activity. The trend is especially important given high bond yields in developed markets, which would ordinarily weigh on a non-yielding asset such as gold. The pickup in August indicates that official buyers were not discouraged by high prices. For China, buying that is significantly above its reported figures suggests a continued effort to shift reserves away from the dollar. Geopolitical factors, including the Iran war, continue to drive safe-haven demand and may further support official-sector purchases.

Central banks continue to purchase gold at multiples of their historical rate, and Goldman Sachs views this steady official demand as a support level for the market rather than a temporary phenomenon.

Summary:

• According to Goldman Sachs, central banks added an estimated 79 tonnes of gold in August, as reported by Reuters.
• That total is far above the pre-2022 monthly average of 17 tonnes.
• China emerged as the largest identifiable purchaser, with an estimated 25 tonnes.
• Goldman continues to regard central bank demand as a structural underpinning for gold.
• The August estimate marks a notable increase from Goldman's July estimate of 44 tonnes.
• Goldman's China estimate surpasses the approximately 20 tonnes the PBOC officially reported for August.

In a Monday note, Goldman Sachs estimated that central banks purchased roughly 79 tonnes of gold in August, sharply exceeding their long-term pace, and stated that official-sector demand continues to be a structural support for the metal.

The bank noted that August buying was substantially above the pre-2022 average of 17 tonnes per month, representing more than quadruple that historic rate. China was the top identifiable buyer for the month, with Goldman estimating its purchases at 25 tonnes.

The August total represents a significant acceleration from Goldman's July estimate of 44 tonnes, indicating that central banks kept building reserves despite high gold prices.

Goldman's numbers are estimates, not official figures. The bank constructs its monthly indicator using trade and flow data rather than solely depending on central bank disclosures, which often come with a lag and miss some purchases. Consequently, its estimates frequently exceed reported totals and may be adjusted as additional data emerge.

The discrepancy is evident in China. The People's Bank of China officially disclosed adding roughly 20 tonnes of gold in August, prolonging a buying streak of almost two years. Goldman's estimate of 25 tonnes implies that China's actual purchases were bigger than reported, aligning with the bank's earlier observations that Chinese buying has exceeded official figures this year.

The volume of purchases since 2022 underscores a wider change in reserve management. Numerous central banks, especially in emerging economies, have been raising gold holdings to reduce reliance on the US dollar and limit vulnerability to financial sanctions—a trend that intensified after Western nations froze Russian reserves subsequent to the invasion of Ukraine.

For the gold market, the importance is in the character of this demand. Central banks typically buy consistently and are less price-sensitive than investors, offering support when speculative positions or ETF holdings decrease. Goldman believes this official-sector buying is a permanent attribute of the market, not a temporary one.

Official figures already indicate ongoing purchases, as the PBOC reported its biggest monthly addition in roughly three years in September, marking its 23rd consecutive month of buying. October data, expected around 7 November, will reveal if that rate has been maintained.