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Demand for gold by central banks and official sector institutions were more than double the level reported a year ago, as emerging market central banks continue to gobble up gold due to concerns about fiat currencies, such as the U.S. dollar and especially the euro, according to World Gold Council data released Thursday.
Gold reserves at central banks increased by 158 metric tons, a rise of more than 130 percent over the corresponding period last year and the largest quarterly net purchase by this sector since it became a net buyer of the yellow metal in the second quarter of 2009. The official sector accounted for 16 percent of the total gold demand of 990 tons in the second quarter.
Should central banks continue to buy gold at the current rate and add roughly another 250 tons between now and December, official sector gold purchases would likely total around 500 tons this year, which will be a record since 1964, said Marcus Grubb, managing director at WGC.
Purchases in the first half of the year totaled 254 tons, up 25 percent from 203 tons in the same period last year.
"You'll see central banks to continue make major contributions on the demand side of the market, though it's mainly emerging country central banks doing the purchasing," Grubb said.
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