Gold buying by central banks seen climbing from near decade low – Bloomberg
Early Wednesday morning in Asia Bloomberg came out with the analysis, taking clues mainly from the Citi and the HSBC bank, which hints further picking up in gold demand. The piece anticipates a pick-up in the central banks’ buying of the yellow metal due to one-decade low price levels.
James Steel, the chief precious metals analyst at HSBC, is quoted in the article as saying, “Although official sector gold demand was quite robust in 2019 and 2018 and is softer this year, it is not necessarily weak by historical standards. While the influence of central bank activity should not be discounted, it is taking a backseat to ETFs and other forms of demand this year.”
On the other hand, the Citi bank report also mentions, as per the report, that Russia could return to the market next spring and China’s central bank may resume adding to reserves after the U.S. elections.
The piece also mentions the WGC data as saying, “While central banks were net buyers for a 10th straight year in 2019, demand has become more concentrated, with fewer banks adding to reserves in 2020, according to the World Gold Council (WGC). Purchases dropped 39% to 233 tons in the first half from the same period a year ago.”
Market implications
Gold prices ease from a one-week high by the time of the press. While cautious sentiment ahead of the US Presidential Debate might have caused a pullback of the yellow metal, updates like this suggest further strengthening of the bullion prices beyond the current levels near $1,894.
Author
Anil Panchal
FXStreet
Anil Panchal has nearly 15 years of experience in tracking financial markets. With a keen interest in macroeconomics, Anil aptly tracks global news/updates and stays well-informed about the global financial moves and their implications.
