China leads record central bank gold buying in 2023

China has led record levels of central bank gold purchases internationally in the first nine months of 2023 as governments strive to hedge against inflation and lessen their reliance on the currency.

According to a World Gold Council study, central banks purchased 800 tons in the first nine months of the year, up 14% year over year.

The “voracious” rate of buying has enabled gold prices to defy rising bond rates and a strong currency, trading just shy of $2,000 per troy ounce.

In many economies, rising consumer prices and falling currencies have prompted a rush to gold as a store of wealth, and the yellow metal has historically been kept when global inflation rises.

Central banks’ rush to gold is also motivated by countries’ desire to reduce their reliance on the US dollar as a reserve currency after Washington’s weaponization of the greenback in its sanctions against Russia.

As part of an 11-month purchasing spree, China has become the top consumer of gold this year.

The People’s Bank of China reported purchasing 181 tons of gold this year, bringing its gold holdings to 4% of its reserves.