Central banks plunge back into the gold market
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(Kitco News) – Central banks from Serbia to Thailand have increased their holdings of gold and Ghana recently announced purchase plans. This comes as the threat of accelerating inflation looms and a recovery in global trade provides the firepower needed to make diversification purchases.
The Bank of Ghana to implement a gold purchase program designed to purchase locally produced gold. Vice President Bawumia said the benefits of having a good amount of physical gold in a country’s reserves are varied and huge, including boosting the value of the local currency. The BoG’s decision, he said, “is a game-changer.”
Thailand was the biggest buyer, adding an additional 46.7 tonnes in May and accounting for 82% of total net purchases for the month. Turkey also increased its gold reserves by 8.6 t during the month, bringing the sector’s official reserves to 415 t. Brazil increased its gold reserves by 11.9 t, its first addition since November 2012. Gold reserves now stand at 79.3 t (1% of total reserves) which is the highest level. high since November 2000. Kazakhstan (5.3 t), Poland (1.9 t), and India (0.9 t) were the other notable buyers during the month
The National Bank of Serbia said: “In the long term, gold is the most important guardian and guarantor of protection against inflation and other forms of financial risk”. Serbian President Aleksandar Vucic recently announced that the central bank intends to increase holdings of the precious metal from 36.3 tonnes to 50 tonnes.
Looking at the comment from investment bank James Steel, chief precious metals analyst at HSBC “If a central bank is looking to diversify, gold is a wonderful way out of the dollar without selecting another currency.”
The World Gold Council (WGC) said that after a higher level of monthly net buying in March and April, our latest data released today shows this trend continued in May. Net central bank purchases totaled 56.7 tonnes in the month, down 11% M / M but 43% above the YTD monthly average.
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