World’s Central Bank Hungry for Gold, Demand at 3 Year Highs

World’s Central Bank Hungry for Gold, Demand at 3 Year Highs

$XAU, $GLD

FLASH: Perfect environment to keep Gold above $1,400 oz

The World’s central banks continued to buy gold in 1-H, helping drive demand to a 3-yr highs, according to the World Gold Council (WGC)

Nations added 374.1 tonnes in the 1st 6 months as Russia and China kept building reserves and Poland made a huge purchase. The trend is expected to continue, as a recent survey of central banks showing 54% of respondents expect global holdings to climb in the next 12 months.

Central banks around the world have added to reserves as economic growth slows, trade and geopolitical tensions rise, and authorities seek to diversify away from USD.

Gold rallied to 6-yr highs in July, as expectations for lower US interest rates and concerns about the economy boosted its appeal.

Spot gold edged lower Thursday, falling for a 2nd day after the Fed signaled it may not embark on a lengthy easing cycle. The metal declined 0.5% to $1,407.04 oz, paring this year’s gains to 9.7%.

Nations have expanded gold holdings by about 14% since Y 2009, and the holdings are now valued at $1.6-T.

Poland bought 100 tonnes in Q-2, the most by a central bank since India’s purchase in Y 2009, the WGC said in a report Thursday.

Poland’s addition followed a smaller purchase last year.

Countries like Russia and China are regular buyers, but that was aided by a mining industry that Poland does not have, said the director of market intelligence at the WGC.

Poland’s buying is not just opportunistic,” he said. “It is supported by the same underlying motivation that many central banks share, which is as a store of value, diversification and, in some instances, to protect themselves from political risk.”

Total gold demand rose about 8% from a year earlier to 2,181.7 tonnes, the most for a 1-Hsince 2016.

Gold ETFs holdings have surged, with UK-listed ETFs attracting 75% of the inflow in Q-2, partly because of BREXIT concerns. Many of the drivers supporting gold are unlikely to fade any time soon, as central bank buying will also likely continue.

There are signs that gold’s rally is starting to hurt demand. While jewelry purchases rose 2% in Q-2, demand slowed in June in India and China, the Top buyers. Appetite from bar and coin investors also declined recently, he said. Soon those buyers will get used to the price and will take up again.

Stay tuned…

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Paul Ebeling

Paul A. Ebeling, polymath, excels in diverse fields of knowledge. Pattern Recognition Analyst in Equities, Commodities and Foreign Exchange and author of “The Red Roadmaster’s Technical Report” on the US Major Market Indices™, a highly regarded, weekly financial market letter, he is also a philosopher, issuing insights on a wide range of subjects to a following of over 250,000 cohorts. An international audience of opinion makers, business leaders, and global organizations recognizes Ebeling as an expert.

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