Central banks continue to buy gold
by homment | 27.03.2013 | Views: 638
via Commerzbank / Germany
Gold is currently no longer able to profit from the politically-driven financial markets and the resulting uncertainty among market players. Under pressure from a firmer US dollar, the yellow precious metal has slipped below the $1,600 per troy ounce mark again this morning. The central banks of emerging economies took advantage of the low gold prices in February and bought additional gold to diversify their currency reserves. According to figures from the International Monetary Fund, purchases totalled around 20 tons last month. The buyers included not only Russia (7 tons), but also Kazakhstan (4.9 tons), Mongolia (1.5 tons), Azerbaijan (1 ton) and Ukraine (0.6 tons). Turkey also topped up its gold reserves by 5.7 tons, albeit as a result of new regulations introduced several months ago. Because gold still makes up a very low proportion of the currency reserves of emerging economies as compared with many industrialized nations, central banks in these countries can be expected to continue to buy gold in the coming months. What is more, gold can serve as an attractive alternative currency in view of the debt crisis in the eurozone and the devaluation race between currencies. In our opinion, central bank purchases are thus likely to act as an important crutch for the gold price this year too. The silver price came under even more severe pressure this morning and has fallen to a 3½-week low of $28.25 per troy ounce.