"Official sales ran hot in 2007, offset by rapid de-hedging. Gold undoubtedly faced headwinds this year from resurgent central bank selling, which was clearly timed to cap the gold price. Our sense is that central banks have been forced to choose between global recession or sacrificing control of gold, and have chosen the perceived lesser of two evils. This reflationary dynamic also seems to be playing out in oil markets."
One thing that we should bear in mind here is that the central bank numbers are based on 'official' numbers given to the World Gold Council.
There is significant evidence that some of the central banks, notably China, are significantly understating their acquisition of gold as a matter of their own discretion.