Central banks slowed their gold purchases in February, snapping up 25 tons of the yellow metal against a combined 41 ton purchase in January, data from the World Gold Council showed.
The purchases were also outweighed by monthly sales by certain banks, pushing collective gold holdings of global central banks to decline by 16 tons on a net basis in February, the first decline since January 2015, noted London-based Capital Economics in a note.
Most of the purchases were by China and Russia, who added 10 and 11 tons of the precious metal to their holdings, respectively, after a sharp run-up in purchases over the last ten years.
Capital Economics' commodities economist Simona Gambarini said that the slowdown in the pace of buying by central banks appeared to be seasonal.
Purchases are likely to resume later in the year as gold remains a strategic reserve asset for central banks, she added.
"There are good reasons for central banks to continue to use gold as part of their reserve assets, including diversification away from the dollar. This is mostly the case for emerging markets central banks, which have lower gold holdings as a percentage of total reserves, compared to advanced economies," she wrote.
Turkey reduced gold reserves by 37 tons in February, but the country typically posts volatile numbers for gold holdings as the data also include commercial holdings, noted Gambarini.