Russia is loading up on gold

Central banks around the world added a net 13 tonnes of gold to their stockpiles in September, according to data released by the World Gold Council on Wednesday.

The Central Bank of Russia was the biggest buyer, purchasing 16.55 tonnes. September’s addition marked a 20th straight month of buying for the CBR, which hasn’t seen reserves fall since January 2015 when its holdings dropped by 0.48 tonnes.

And Russia’s central bank was not the only one buying, China and Kazakhstan saw their gold holdings increase by 4.98 tonnes and 4.14 tonnes, respectively, the WGC said. Interestingly, September’s three notable buyers are the only central banks that have seen their holdings increase in 2016, and that isn’t expected to change anytime soon.

As Citi analyst Nell Agate wrote last month, “While negative real interest rates and low sovereign bond yields across several key currencies and countries may encourage inflows into gold, particularly as there are limited alternatives for safe-haven / reserve assets, we expect to see reserve holdings maintain current trends.”

On the other side of the spectrum, Turkey’s holdings fell by 13.45 tonnes in September. However, the WGC says that Turkey’s number is considered more volatile because it includes holdings from commercial banks which are allowed to store their gold at that country’s central bank.

Meanwhile, in a note to clients sent out last week, Capital Economics notes that gold demand from ordinary people in China and India is on the rise.

They cite data from the Hong Kong Census and Statistics Department showing that imports to China are up 9% year-over-year in the January through September period, and that premiums are at their highest level since December 2015.

Additionally, Capital Economics says data from the Indian Commerce Ministry show demand in India is bouncing back, but remains depressed. They wrote, “With the wedding and festival season having just started and the monsoon having been a lot stronger this year, we expect demand to pick up in the coming months.”

For what it’s worth, the renewed demand in September was unable to support gold prices. The precious metal ended the month little changed near $1,316 per ounce before bottoming out near $1,250 in October. Gold has since seen a bounce above $1,300 and trades up 0.3% at near $1,302 on Thursday.

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