Central banks bought 77 tonnes of gold in August, marking an increase of 38% m/m, according to the World Gold Council (WGC).

Analysts say central bank demand continues to dominate the gold market. Their appetite could be a key factor in why the precious metal continues to hold critical long-term support levels despite rising bond yields and persistent dollar strength, they observe. From June to August, central banks bought 219 tonnes of gold.

“This recent buying suggests that we have now firmly moved past the net selling we saw in April and May, which was primarily driven by heavy, non-strategic selling from Turkey,” Krishan Gopaul, a senior analyst at the WGC, said in a report. “We are therefore confident that the long-term trend of healthy central bank demand remains in place.”

Gopaul did note, however, that the buying has been limited to just a small number of central banks. China dominated in August, purchasing 29 tonnes of gold. Since last November, the People's Bank of China has expanded its gold reserves by 217 tonnes to 2,165 tonnes, representing a tad over 4% of its total foreign reserves.

Poland bought 18 tonnes of gold in August. The country’s national bank has bought 88 tonnes this year to date. It is working to a 100-tonne target.

Poland's gold reserves amount to 314 tonnes, or 11% of total foreign reserves.

Turkey bought 15 tonnes of gold in August. It continues to reconstitute its reserves following significant selling in April and May.

Also in August, Uzbekistan upped its gold reserves by nine tonnes, while the Reserve Bank of India, Czech National Bank and Monetary Authority of Singapore each bought two tonnes of gold. The National Bank of the Kyrgyz Republic purchased one tonne.

There were no notable gold sellers in August, the WGC added.

December gold futures were currently testing critical support at $1,830 an ounce, Kitco News reported on October 5. Analysts have said that if this line were to break, prices could drop to $1,800 an ounce, it added.

The trade media outlet quoted James Robertson, an analyst at Grant's Interest Rate Observer, as saying: "Gold is the only way central banks in emerging markets can give them[selves] independence from the monetary mayhem that is the result of the US dollar."