After a year or so of relatively lackluster performance, the gold market surged in 2022 as several countries significantly increased their gold purchases as part of efforts to build up their reserves. By the time 2022 drew to a close, central banks around the world had purchased a whopping 1,136 tons of gold, pumping around $70 billion into the market.
China’s central bank was among the largest buyers of gold through 2022 and into 2023, buying nearly one-half of the global gold purchases in 2022 (522 tons) and 244 tons in January and February. Beijing has increased its gold purchases repeatedly over the course of the year, adding an additional 19 tons of gold in May to bring its total gold stockpile to 2,092 tons.
Like several other major central banks, the People’s Bank of China has increased its gold holdings for several months in a row amid surging rates of global inflation and a volatile geopolitical environment. The surge in global gold purchases is also partly due to declining trust in the U.S. dollar among economies such as China and Russia.
Even though the World Gold Council reports that there was a major drop in gold purchases during the first quarter of 2023, market analysts predict that central banks will continue purchasing gold through the year. According to a recent council poll, at least a quarter of central banks around the world plan to increase their gold reserves in 2023 with skepticism about the greenback being one of the drivers for gold purchases. Additionally, London Bullion Market Association CEO Ruth Crowell posited that central banks would maintain a robust demand for gold bullion through 2023.
Unsurprisingly, surging central bank demand caused gold prices to spike and reach an all-time high in May when Singapore dethroned China as the largest gold buyer on the globe. Gold prices are expected to remain relatively high for the rest of the year based on predictions of demand from central banks. These banks are among the largest gold buyers worldwide and they currently have over 35,715 metric tons of gold in their reserves.
With the dollar, which has traditionally served as a world currency, performing poorly in recent months amid declining economic conditions globally, central banks have been buying up gold in droves to help provide stability to their currencies. Recent geopolitical events such as the Russian-Ukrainian War and ongoing political tensions between the U.S. and China have also caused Beijing and the Kremlin to increase their gold holdings.
As different countries move to bolster their gold holdings, enterprises such as Arizona Metals Corp. (TSX: AMC) (OTCQX: AZMCF) are likely to be encouraged by the favorable market conditions and ramp up their programs to bring more gold onto the market.
NOTE TO INVESTORS: The latest news and updates relating to Arizona Metals Corp. (TSX: AMC) (OTCQX: AZMCF) are available in the company’s newsroom at https://ibn.fm/AZMCF
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