After a long break, the monthly purchase data shows that the central bank is buying gold again. The World Gold Council stated that throughout March and April, the organization recorded higher levels of monthly gold purchases by the central bank, and the latest data in May showed exactly the same trend.

Data shows that gold rose after the central bank’s gold buying trend rose

After a new rise after the weekend, the price of gold per ounce hovered above the $1,800 area. The value of gold jumped above its 100-day moving average and changed hands at its highest price in two weeks. At the end of June, gold fell to a two-month low, after which precious metals rose by 3%.

On Wednesday, the Fed plans to release the minutes of the Federal Open Market Committee (FOMC) meeting of the latest committee meeting, and the results may shake the market. The fall in gold prices in mid-June occurred when the Federal Reserve announced changes in its hawkish interest rates and the U.S. dollar strengthened.

As the minutes of the Fed meeting approached, gold soared and central bank gold purchases began to increase

One reason why gold may rise against the U.S. dollar is that some central banks in the world have been actively buying gold since the beginning of this year. The central bank’s gold purchases are already much higher than in 2020. After the Covid-19 outbreak and throughout 2020, the central bank’s gold purchases were reduced by half compared with the previous two years.

Today, data from the World Gold Council (WGC) shows that the central bank purchased higher levels of gold throughout March and April. Kitco’s statistics also show that in May, central banks around the world “purchased 56.7 tons that month, down 11% month-on-month, but 43% higher than the monthly average year-to-date.”

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HSBC’s chief precious metals analyst James Steel told Bloomberg this week that the central bank’s shift to gold is a positive trend. “If the central bank is considering diversification, then gold is a wonderful way to get away from the US dollar without having to choose another currency.” Steel further stated that the central bank may continue to buy gold. HSBC precious metals analysts emphasized that due to the sharp rise in crude oil prices, the central bank’s gold purchases have been expanded.

Countries that buy large amounts of gold for central bank reserves include Ghana, Turkey, Serbia, Thailand, Brazil, India and Kazakhstan. Last week, Serbian President Alexander Vucic explained the reasons for the increase in the purchase of gold by the National Bank of Serbia.

“In the long run, gold is the most important guardian and guarantor against inflation and other forms of financial risks,” Vucic told the media. The Central Bank of Serbia stated that it intends to increase its gold by 36.3 tons and increase to 50 tons.

Crude oil hits 2021 price highs, demand for physical gold resurfaces

Kitco’s statistics in May show that Thailand is the largest buyer of gold bullion, as the country accounted for 82% of the global net purchases of gold that month. In the same month, Brazil increased its gold reserves for the first time since 2012.

Gold bug and economist Peter Schiff agreed that crude oil prices have risen sharply recently. “In case no one in the United States pays attention to the oil market during the federal holiday,” Schiff Say on Monday. “The price has just hit a new annual high of $76.39.” Schiff continued:

We are about 50 cents away from the highest price since November 2014. Low oil prices are temporary. Be prepared for higher prices.

American investors are waiting for the Fed’s meeting minutes report this week to get a clearer picture of what the Fed will do next. Joseph Stefans, chief trader of MKS (Switzerland) SA, said that the demand for physical gold bars has recently reappeared.

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Stephens pointed out on July 6: “Physical demand has begun to recover, and the real yield in the United States continues to fall, which has brought some dollar selling to the market.” The gold transaction price was 0.83% higher than yesterday’s $1,791 per ounce. $1,806 per ounce Monday morning ounce. Some other analysts believe that it is too early to clarify the future performance of gold before the minutes of the Fed meeting.

“After the sell-off in mid-June, gold prices seem to have bottomed recently. However, it is too early to get a clearer picture before the minutes of the Fed meeting,” said Alexander Alexander, a senior trader at the refiner Heraeus Metals Germany GmbH & Co. KG. Zumpfe. Told Bloomberg on Monday.

How do you see the recent performance of gold and the renewed interest in gold by central banks? Please tell us your thoughts on this topic in the comments section below.

Tags in this story

Aleksandar Vucic, Alexander Zumpfe, Brazil, gold and silver, buying gold, central bank, Federal Reserve, Ghana, gold, gold buying, gold tons, HSBC, India, James Steel, Joseph Stefans, Kazakhstan, Peter Schiff, Serbia, Thailand, Tons, Turkey, WGC, World Gold Council

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