In 2020, gold purchase by central banks around the world declined sharply in 2020, particularly in the second half of the year, according to the World Gold Council's latest gold demand trends report.
Data showed that in the fourth quarter of calendar 2020 saw central banks return to modest net buying of 44.8 tonnes after small net sales in the preceding quarter. Central banks' annual gold purchases fell nearly 60% to 272.9 tonnes.
"The 2020 annual figure marks a year of two halves, with demand dynamics changing as the year progressed. The first half of the year saw a continuation of the longstanding trend of net buying, with central banks accumulating 234.6 tonnes. But the overall pace of purchasing began to slow in early H2, coinciding with a sharp pick-up in sales volumes," the report said.
In the third quarter of 2020, for the first time in several years, central banks turned net sellers in gold, raising concerns that dumping of the yellow metal by central banks may reduce the safe-haven appeal of the asset amid the pandemic.
The WGC report further said the number of central banks buying the yellow metal continued to outweigh the number of those selling it over the year. Turkey was once again the largest annual gold buyer, adding 134.5 tonnes to its official gold reserves in 2020. India added 38 tonnes of gold to its reserves during the year, said the report.