National Bank of Kazakhstan actively sells gold whereas other central banks buy it

The National Bank of Kazakhstan emerged as a global leader in gold sales last year, contrasting with the trend among other central banks, particularly those in developing nations, which sought to accumulate gold reserves, according to analysts at Halyk Finance.

Since 2012, the National Bank has been actively purchasing gold from local producers. By 2022, gold constituted 70% of its reserves. However, experts at Halyk Finance noted that this structure of foreign exchange and gold reserves was characterized by low liquidity. Consequently, the regulator opted to decrease the share of gold in its reserves, a trend that continued in 2023. The National Bank stated that this policy is crucial for proper diversification:

«We have pursued this strategy to enhance the diversification and balance of our foreign exchange and gold reserves allocations, necessary for expanding the share of foreign exchange in our reserves. Later, these will be invested in highly liquid financial instruments.»

In 2023, the National Bank sold approximately 57.43 tons of gold on foreign markets, resulting in the share of gold in Kazakhstan’s international reserves dropping to 54.2% (294 tons). This meets the earlier announced target of 50% to 55% by the end of the year.

By actively selling gold, the National Bank of Kazakhstan surpassed the central banks of many other countries, including Uzbekistan (25.57 tons), Cambodia (10 tons), Bolivia (7.7 tons), and Germany (2.4 tons).

Developing economies in Asia and Eastern Europe have become leaders in acquiring the precious metal. China (224 tons), Poland (130 tons), Singapore (76 tons), Libya (30 tons), and the Czech Republic (18 tons) were the main gold purchasers last year. These figures set historical records over the past 20 years, driven by current geopolitical tensions and countries’ intention to hedge potential risks.

Despite the significant volume of gold sales, Kazakhstan remains one of the top 20 countries in terms of gold reserves. In 2023, the country ranked 18th by this indicator. Among Central Asian states, only Uzbekistan possesses more gold, as gold production is a key priority for Uzbekistan’s economy.

Halyk Finance anticipates that the National Bank will continue reducing the share of gold in its reserves this year and boost its foreign exchange assets, as gold prices are rising in global markets.

The regulator itself stated that it would decide on gold reserves after the share of gold reaches a 50% threshold.