71% of central bankers recently stated that now is a better time to invest in gold

The gold price held steady near $1,640 per ounce Wednesday morning as investors awaited this afternoon’s statement from the Federal Reserve meeting.  The price of gold stabilized in a tight range between $1,637 and $1,645 in overnight trading despite a broad-based rally in financial markets across the globe.

The gold price received a boost on Tuesday from a report by the International Monetary Fund (IMF) showing that several nations around the world added significantly to their gold reserves in the month of March.  According to IMF data, Mexico purchased the largest amount of gold, 16.81 tons, bringing its total to 122.6 tons.  Russia bought the second most gold, 16.55 tons, which increased its holdings to 895.75.  Other nations that purchased noteworthy quantities of the yellow metal included Turkey, the Czech Republic, Argentina, Ukraine, Belarus, Kazakhstan, and Tajikistan.

The IMF also noted that a poll showed 71% of central bankers recently stated that now is a better time to invest in gold than during the start of last year.  Bayram Dincer – an analyst at LGT Capital Management in Pfaeffikon, Switzerland – commented that “We expect that the recent trend of the official sector being a net buyer will continue in the medium and long term. Gold will continue to be a preferred central bank reserve asset. It is currency protection and stabilization.”

Commenting on the gold price in light of the IMF’s report, analysts at UBS wrote in a note to clients that “The confirmation of official central buying should help gold find some stability today, after a poor start to the week.  With positioning light, participants could certainly use this as an excuse to become a little friendlier towards the yellow metal.”

Looking ahead, UBS cautioned that “This sentiment is likely to be put on hold until the FOMC meeting is out of the way tomorrow.  After all, Fed-speak still remains the largest determinant of gold’s direction for now.”

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