The World’s Central Bank’s Demand for Gold at 3-year Highs
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The world’s Central banks’ demand for gold reached a three year high, rising 8% during 1-H of Y 2018 compared to the same frame last year, according to a World Gold Council (WGC) market update on central bank buying activity released Thursday.
Data reveals that 1-H of Y 2018 marks the strongest year for central bank gold buying since Y 2015, a total of 193.3 tonnes of gold have been added to central bank reserves so far, compared to 178.6 tonnes during the same frame in Y 2017.
Emerging market central banks have played a Key role, with Russia, Turkey and Kazakhstan accounting for 86% of central bank purchases in the frame.
An IMF Financial Statistics Report reveals that Egypt recently bought gold for the 1st time since U 1978, and that India, Indonesia, Thailand and the Philippines have re-entered the gold market after years-long absences.
Egypt recently bought gold for the 1st time since 1978, and that India, Indonesia, Thailand and the Philippines have re-entered the gold market after years-long absences
And the Bank of Mongolia has purchased 12.2 tonnes of gold so far this year.
The WGC believes that many emerging market central banks are turning their attention to gold as after years of exposure to the USD, and as a natural currency hedge against other reserve currencies.
“Other reserve currencies continue to deal with significant issues: the Euro faces both political and economic challenges across several member states, the renminbi (RMB Yuan) remains relatively restricted and Sterling continues to grapple with BREXIT uncertainty,” the World Gold Council wrote.
The report maintains that gold is a strategic asset that can help central banks meet tactical objectives, as the international monetary system gradually shifts away from a USD-dominated system towards a multi-polar one.
The WGC believes that central bank demand will remain buoyant as diversification will be an important driver of demand, as well as the transition to a multi-polar currency reserve system over the coming years.
Read the full report here.