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Bloomberg News: Gold Regains Shine After Central Bank Buying Drops to Decade Low

July 06, 2021

Article by Ranjeetha Pakiam, Misha Savic, and Eddie Spence in Bloomberg News

Central banks may be regaining their appetite for buying gold after staying on the sidelines for the past year.

Central banks from Serbia to Thailand have been adding to gold holdings and Ghana recently announced plans for purchases, as the specter of accelerating inflation looms and a recovery in global trade provides the firepower to make purchases. A rebound in buying -- which had dropped to the lowest in a decade -- would bolster the prospects for gold prices as some other sources of demand falter.

“Long term, gold is the most significant guardian and guarantor of protection against inflationary and other forms of financial risks,” said the National Bank of Serbia. Serbian President Aleksandar Vucic recently announced the central bank intends to boost holdings of the precious metal to 50 tons from 36.3 tons.

The recovery in global trade is bolstering the current accounts of emerging market nations, giving their central banks the option of buying more gold. Higher crude prices are also boosting bullion purchases by oil exporters, including Kazakhstan, according to James Steel, chief precious metals analyst at HSBC Holdings Plc. That’s likely to continue, he said.

“If a central bank is looking at diversifying, gold is a marvelous way of moving out of the dollar without selecting another currency,” he added.

About one in five central banks intend to increase their gold reserves over the next year, according to a survey by the WGC published last month.

“Geopolitical tensions, the need for diversification and heightened uncertainty have continued to ......

To read this article in Bloomberg News in its entirety, click here.

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