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.”

Comments

Post a Comment

Popular posts from this blog

Gold edges up on weaker dollar, dovish U.S. Fed policy bets

Image
 Gold edged higher on Monday, helped by a weaker dollar and expectations that the U.S. Federal Reserve will reiterate its dovish monetary policy stance this week. Spot gold was up by 0.1% at $1,943.58 per ounce. U.S. gold futures rose 0.1% to $1,950.10 per ounce. “Gold is firm on the basis that the Fed could adopt a further dovish message with respect to average inflation targeting,” said Michael Hewson, chief market analyst at CMC Markets UK. “If you want to have a policy of average inflation targeting, you’re going to have to go into detail as to how you are going to arrive at that particular outcome.” The dollar retreated on Mond ay, bolstering gold’s appeal for investors holding other currencies, ahead of the Fed’s policy decision due on Wednesday. “If inflation forecasts remain at 2% or below, this could offer gold a tailwind as the zero-yielding metal thrives in a low-interest rate environment,” said FXTM analyst Lukman Otunuga. Market participants are also wai...
Read more

For the gold price, two outcomes are possible.

Image
For the gold price, two outcomes are possible. First is a return to or near the April low ($1,277.40). Second is a drop to a lower low, $1,240 - $1,260. Yet a third possible outcome is that the June and December lows were not a double bottom and one further drop may come. I account that the least likely, and look for a low here by the end of the week, but I'm no more'n a nacheral born durnd fool from Tennessee, so what do I know?   You'd think that an institution charged with promoting the gold industry would produce reports that at least cast the best light on gold's prospects. You'd think wrong, if you're thinking about the World Gold Council. They've been negative on gold for, oh, the last 14 years or so. Today they issued a report that contained a nugget about Chinese business using physical gold as collateral for bank credit ($40 bn worth) but they managed to tease a gloomy forecast even out of this inventive monetary use. That and bad ...
Read more

The price of gold advanced as high as $1,603.40 per ounc

Image
The gold price broke out to a new all-time high above $1,600 per ounce Monday morning, rising for the eleventh consecutive trading session. The price of gold advanced as high as $1,603.40 per ounce before backing off to trade just the $1,600 level. The yellow metal gained on the back of a surge in borrowing costs for Italy, the latest European nation to see its bond market come under heavy selling pressure. The lack of a deal to raise the $14.3 trillion debt ceiling also helped boost gold prices. The eleven-day rise in the gold price is the longest winning streak since January of 1980. The gold price delivered another noteworthy performance last week, climbing 3.2% on its way to a series of fresh record highs. With Monday’s advance, the gold price extended its monthly and year-to-date gains to 6.6% and 12.5%, respectively. Last week’s two-day Congressional testimony by Chairman Ben Bernanke on the economy and monetary policy revealed that the Fed remains open to the...
Read more