Central Bank Gold Demand Continues In Q3

Dedollarization and Uncertainty drive Central Bank Demand for Gold

• Central banks added 81.7t to their gold reserves in the third quarter
• Total central banks purchases in the year-to-date reach 271.1t.
• Fellow-SCO member Kazakhstan and Belarus also had to holdings
• 90% of reserve managers intend to increase or maintain gold reserves.
• “The case for gold remains compelling for reserve managers” state WGC
• Unconventional monetary policies will underpin gold demand in coming years.

 

Central banks added 81.7t to their gold reserves in the third quarter, bringing total purchases in the year-to-date to 271.1t. This was a fall from 168t purchased in the previous quarter. Much of this has gone unnoticed by the mainstream media, something which seems shortsighted given the monetary and geopolitical implications both this and recent elections results may lead to.

The World Gold Council described recent buying as a ‘more measured’ approach to previous years. Between Q3 2014 and Q3 2015 407.7t were purchased by central banks. The data was slightly skewed last year as China contributed their gold reserve data for the first time since 2009.

Gold buying will not stop

The World Gold Council and other mainstream analysts do not appear unduly worried about the fall in gold demand from central banks. The current geopolitical and economic environment provides an irrefutable argument for central banks, as well as investors, to hold gold.

“The case for gold remains compelling for reserve managers amid the prevalence of negative interest rate policies and diversification away from the US dollar” WGC, Q3 report.

Commenting in the aftermath of the US election Juan Carlos Artigas, director of the WGC’s investment research, drew attention to the politics of anger and argument that are playing out across the world stage, signalled by both Brexit and the US election result.

“This trend, combined with uncertainty over the aftermath of years of unconventional monetary policies measures, will firmly underpin investment demand for gold in the coming years,”