Gold Shopping Party
According to the World Gold Council (WGC), central banks continued to extend their “gold shopping spree” from summer to fall, adding 42 tons to their reserves last October.
This is the latest report just released by senior analyst Krishan Gopaul from WGC.
The large-volume net gold purchases by central banks of various countries may be the factor that has pushed the world gold price to continuously increase in recent times. Recently, the gold price set a historical high of 2,150 USD/ounce, before adjusting slightly to the current level of 2,040 USD/ounce.
Besides, the demand for gold jewelry during the holidays in Asia also contributes to pushing up gold prices.
According to the WGC, the amount of gold purchased by central banks in October slowed down slightly compared to previous months. However, the net buying trend remained unchanged. And it attracted the attention of gold investors around the world.
Central banks had previously bought a record 72 tonnes of gold in September, but October’s 42 tonnes was still 23% higher than the 34 tonnes average for the first nine months of 2023.
The People's Bank of China (PBoC) was the top central bank buyer in October, buying 23 tonnes. This was the 12th consecutive month of net purchases by China's monetary policy regulator.
With the net purchase in October, the PBoC has bought a total of 204 tons in the first 10 months of the year, raising its gold reserves to 2,215 tons.
In Türkiye, the central bank bought 19 tons, bringing its total gold holdings to 498 tons. However, in the first 10 months of the year, the organization sold a net 44 tons because in the period from March to May, the Turkish Central Bank sold a large amount of gold to strengthen the domestic currency Lira.
In total, in the three months from March to May, Türkiye sold 163 tons to reduce the amount of Lira in circulation, thereby fighting inflation. However, the Turkish Central Bank's gold sales were on the domestic market to collect Lira.
Also starting in February, Türkiye took steps to limit gold imports to improve its deficit after high demand for gold caused a surge in gold imports, putting huge pressure on Türkiye's current account deficit.
In 2022, the Turkish Central Bank bought the most gold in the world.
In October 2023, the National Bank of Poland bought an additional 6 tons of gold, bringing the total net gold purchases in 10 months to 100 tons, thereby bringing the country's total gold reserves to 340 tons. Meanwhile, the Reserve Bank of India bought an additional 3 tons of gold in October, the Czech Republic bought 2 tons...
In the opposite direction, the Central Bank of Uzbekistan net sold 11 tons, followed by Kazakhstan net sold 2 tons.
The world still looks to gold, price in uptrend
It can be seen that the main trend of banks in the world in the past 2 years has been to buy gold strongly. That is through official channels reported by countries to the World Gold Council. In reality, the amount of gold imported into countries may be larger than that.
Previously, many forecasts said that 2023 would be a year of strong net gold purchases by central banks. This has happened and is even higher than most forecasts.
It can be seen that countries are still racing to import gold and gold prices are forecast to continue to rise. Gold is also said to have strong support from the weakening of the USD in 2024 when the US Federal Reserve (Fed) reverses monetary policy and cuts interest rates next year.
Some forecasts suggest that gold could even reach $3,000/ounce (about VND90 million/tael) in 2024.
Stewart Thomson, president of Graceland Investment Management, said on Kitco that gold could stall in the next week or two. But any dips in prices would be seen as a buying opportunity ahead of the 2024 bull market, he said.
Stewart Thomson even believes that 2024 will be the “golden year” for this precious metal.
According to experts from Graceland, interest rates could stay low until 2026 or 2027 before the US government creates the next big wave of inflation. At that time, the Fed will start raising interest rates again and gold will be negatively affected.
However, by then, gold was probably above $3,000 an ounce.
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