Gold Climbs Higher As Fed Minutes Report Looms That Central Bank Gold Bullion Purchases Begin To Swell – Economy Bitcoin News
After a long pause, the monthly purchase data shows that central banks are buying gold again. According to the World Gold Council, the organization saw higher levels of monthly central bank gold purchases in March and April, and the latest data from May shows the exact same trend.
Gold rises after data shows a higher trend in central bank gold purchases
Gold per ounce is hovering just above the $ 1,800 zone after seeing some fresh gains after the weekend. The value of gold jumped above its 100-day moving average and is changing hands at the highest price in two weeks. At the end of June, gold fell to a two-month low and since then the precious metal has gained 3%.
On Wednesday, the Federal Reserve plans to release the Minutes of the Open Market Committee (FOMC) of its final committee meeting and the result could rock the markets. The drop in gold prices in mid-June occurred when the Fed announced its restrictive interest rate changes and the US dollar gained some strength.
One reason gold could appreciate against the dollar is because some of the world’s central banks have been actively buying gold since the beginning of the year. Central bank gold purchases are already much higher than in 2020. After the outbreak of Covid-19 and throughout 2020, central bank gold purchases were halved compared to the two previous years.
Today, data from the World Gold Council (WGC) shows higher amounts of gold bought by central banks in March and April. The Kitco statistics also show that in May the world’s central banks “bought 56.7 tons during the month, 11% less M / M but 43% above the YTD monthly average”.
HSBC’s chief precious metals analyst James Steel told Bloomberg this week that central banks’ entry into gold was a positive trend. “If a central bank is looking to diversify, gold is a wonderful way to get out of the dollar without choosing another currency.” Steel said central bank purchases of gold bullion are likely to continue. The precious metals analyst at HSBC emphasized that the price of crude oil had risen dramatically, which had boosted central banks’ bar buying.
Countries that buy large amounts of gold for central bank reserves include Ghana, Turkey, Serbia, Thailand, Brazil, India and Kazakhstan. Last week, Serbian President Aleksandar Vucic explained why the Serbian National Bank is increasing gold purchases.
“Gold is the most important guardian and guarantor of protection against inflation risks and other financial risks in the long term,” Vucic told the press. The Serbian central bank said it intends to top up its 36.3 tons of gold and bring it up to 50 tons.
Crude oil taps a price high by 2021, physical gold demand emerges again
Kitco statistics for May show Thailand was the largest buyer of gold bars, as the country accounted for 82% of the month’s net global gold purchases. In the same month, Brazil increased its gold reserves for the first time since 2012.
Goldwanze and economist Peter Schiff agrees that crude oil prices have risen significantly recently. “In case no one in America pays attention to the oil market on a federal holiday,” said Schiff said On Monday. “The price has just hit a new year high of $ 76.39.” Schiff continued:
We’re about 50 cents away from hitting the highest price since November 2014. Low oil prices were temporary. Be prepared for much higher prices.
American investors await the Federal Reserve’s minutes report this week to get a clearer idea of what the Federal Reserve will do next. Joseph Stefans, Head Trader at MKS (Switzerland) SA, says the demand for physical gold has resurfaced recently.
“Physical demand has popped back a little, real yields in the US continue to decline, leading to some dollar sales in the market,” noted Stefans on July 6th. Gold is trading 0.83% higher than yesterday’s price of $ 1,791 an ounce at $ 1,806 an ounce on Monday morning. Some other analysts believe it is too early to be clear about future gold performance before the Fed’s minutes.
“It seems like the gold price bottomed out recently after it sold off in mid-June. However, it is still too early for a clearer picture before the Fed minutes “, explains Alexander Zumpfe, Senior Trader at the refinery company Heraeus Metals Germany GmbH & Co. KG. said Bloomberg on Monday.
What do you think of the recent performance of gold and the central banks’ regaining appetite for it? Let us know what you think on this matter in the comments below.
Photo credits: Shutterstock, Pixabay, Wiki Commons, goldprice.org, Bloomberg,
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