Central Banks Continue to Increase Gold Reserves
Central banks around the world have sustained their gold buying spree in November. According to Krishan Gopaul, a senior analyst at the World Gold Council, public records and International Monetary Fund reports confirm that central banks purchased a net of 44t of gold during the month.
Emerging Markets Lead the Way
Gopaul emphasized that the trend of central banks adding gold to their reserves was particularly pronounced in emerging markets in Asia and Europe. Meanwhile, developed nations remained relatively inactive in terms of gold sales or purchases.
Turkey and Poland Lead in Gold Purchases
The Central Bank of Turkey took the lead in gold purchases during November, acquiring 25t of the precious metal. The National Bank of Poland followed closely, adding 19t to their reserves. The People’s Bank of China ranked third, having purchased 12t of gold. However, China has been the largest gold buyer throughout 2023, acquiring over 200 tonnes.>
Financial Uncertainty and De-Dollarization
Steve Hanke, an economist and professor, attributes the increased gold purchases to the uncertainty surrounding fiat currencies. Hanke suggests that the use of the U.S. dollar as a geopolitical weapon and the application of sanctions have prompted countries to shift towards “de-dollarization mode.” Central banks see gold as a stable reserve asset in these circumstances.
Gold’s Performance Forecast
The World Gold Council predicts that gold will experience a flat performance in a soft landing scenario.
Hot Take: Central Banks Maintain Demand for Gold Amidst Financial Uncertainty
Central banks worldwide continue to prioritize gold as a reserve asset, with emerging markets leading the way. The Central Bank of Turkey, the National Bank of Poland, and the People’s Bank of China were the top gold buyers in November, highlighting the growing importance of gold in uncertain financial times. Economist Steve Hanke suggests that the rise in gold purchases is a result of countries diversifying away from the U.S. dollar and seeking stability. Although the World Gold Council predicts a flat performance for gold, its popularity as a safe-haven asset remains strong.
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