The year of 2022 was truly exceptional for gold. Central banks' interest in this asset grew incredibly, especially in the second half of the year (see the article Record purchases of central banks. They haven't bought so much gold since 1967). In total, national banks increased their gold reserves by 1,136 tonnes. A more detailed analysis now shows that central banks have bought the most gold since 1950. 2022 was the year of the highest purchases in history.

However, overall global demand also rose last year. It reached its highest level since 2011 and rose 18% year-on-year. Investment demand, compared to 2021, was increased by 10% to 1,107 tonnes of gold.

“Gold's steady performance in 2022, despite strong headwinds from rising rates and a strong dollar for most of the year, has reignited investor interest,” according to Tuesday's WGC report.

It says that the continued weakening of the US dollar, the risk of recession and the high correlation between bonds and stocks are driving gold to growth. According to the WGC, it is difficult to predict further development of demand from central banks. The slowdown in the growth of total reserves will put pressure on some banks while reducing their ability to convert reserves into gold. Purchases this year may therefore be a bit more moderate on their part.

It is hard to say why central banks bought so much gold last year. But the extraordinary volume of purchases shows that the precious metal is being reconsidered by central bankers. For gold, this means interest from bulk buyers at a time when mining costs are rising. And this will sooner or later have a significant impact on the price of the yellow metal. The behaviour of the central banks and its consequences will probably be grasped by some analysts in the foreseeable future. We will monitor the situation closely and keep you informed.