Turkey Returns to Gold Accumulation Following Three-Month Liquidation, World Gold Council Reports
The central bank of Turkey has resumed the expansion of its gold reserves after a three-month selling spree, as reported by the World Gold Council (WGC). In June, the bank increased its reserves by 11 tonnes, lifting the country's total official gold holdings to 440 tonnes, according to WGC's senior analyst, Krishan Gopaul.
The return to gold purchases follows a significant liquidation period that saw Turkey selling 159 tonnes in the past three months. This selling spree reduced the country's official gold reserves to 428 tonnes, an amount that equaled its collective acquisitions from the previous 12 months.
The WGC explained that the selling spree was not a change in the country's long-term gold policy but rather a response to domestic market dynamics, including high gold demand and a provisional partial prohibition on gold bullion imports.
Earlier in February, Turkey implemented measures to rein in rising gold imports that were negatively impacting the country's deficit situation. The escalating gold demand had led to an increase in gold imports, placing considerable strain on Turkey's current-account deficit.
Turkey's large-scale gold sales had a significant global impact, resulting in a 27-tonne decrease in global official gold reserves in May. In the preceding year, when worldwide central banks collectively bought a record 1,078 tonnes of gold, Turkey was the most prominent buyer. The country's official gold reserves grew by 148 tonnes, culminating at a record 542 tonnes.
In recent times, Turkey's domestic market has witnessed a significant surge in gold demand. Citizens turned to the precious metal as a hedge against soaring inflation and currency devaluation, with inflation rates exceeding 85% at one point last year.
In addition to Turkey, other central banks were also active in gold transactions in June. The People's Bank of China stood out, adding 21 tonnes to its reserves. This marked the eighth consecutive month of gold buying for China, with an overall acquisition of 165 tonnes. This latest purchase raised China's total reserves to 2,113 tonnes.
Meanwhile, Poland's central bank also made significant gold acquisitions in June, adding around 13 tonnes and bringing its total reserves to approximately 276 tonnes. The Czech National Bank continued its gold buying streak for the fourth consecutive month, with its purchases so far this year totaling around eight tonnes.
The Central Bank of the Republic of Uzbekistan also increased its reserves in June, adding eight tonnes in its first monthly purchase since February, according to the WGC.
These trends reaffirm gold's status as a reliable asset for central banks worldwide, offering protection against inflation and currency instability. While short-term strategies might vary, countries like Turkey illustrate the long-term allure of the precious metal within the fiscal plans of global economies.
