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Central Banks Plan To Buy More Gold In 2022

Commodities / Gold and Silver 2022 Jun 30, 2022 - 08:43 PM GMT

By: Travis_Bard


While gold and silver prices have fluctuated somewhat of late, both assets were performing a little more solidly throughout US trading last week.

In fact, August gold futures were up by around $6.90 at $1,828.10 by Wednesday last week, while July Complex silver futures increased by $0.054 to $20.86 per ounce during the same timeframe.

However, the market remained watchful head of a highly anticipated central bankers’ forum in Portugal, which was set to feature influential speakers such as ECB President Christine Lagarde, Bank of England governor Andrew Bailey and Federal Reserve Chairman Jerome Powell.

This will also follow a recent central bank survey, which revealed some fascinating insights pertaining to gold and the precious metal market. We’ll explore these in a little more detail below:

What Did We Learn from the Central Bank Survey?

The annual central bank survey took place last week. A series of questions asked them how they plan to invest going forward. Some of the highlights included:

  • Gold continues to be viewed favourably by central banks as a reserve asset.
  • 25% of respondents say they have plans to increase their gold reserves, up from 21% last year.
  • Recent economic and geopolitical developments may have contributed to a subtle but growing divide between central bank respondents in advanced economies and those in Emerging Market and Developed Economies (EDME).

Gold seems to be viewed as a safe haven against inflation, global risks, and dependency on the dollar. Of course, this rule has remained largely unchanged through history, but there seems to be no sign of such a trend abating anytime soon.

The chart below shows how this has shifted over the last 4 years:

Giles Maber from Gold sellers Sharps Pixley says:

'Due to financial uncertainty, it is no surprise that we are seeing central banks adding gold to their reserves. Coupled with the threat of international hostilities, central banks are seeing gold as a way of reducing dependency on other nations. For retail investors, gold continues to be a safe investment, but this central bank buying could cause already high prices, to become unaffordable for many over the coming months. The result could be a much needed boost for silver.’

For investors this presents a difficult decision as to whether it’s worth purchasing gold in the current circumstances. If it continues its current meteoric rise, then it will be a great asset to protect them from dips in the stock market over the coming months.

It may be a somewhat easier decision for investors who already own gold, as they will be looking for a peak in price where they can sell and potentially redistribute some of their portfolio in potential growth markets – such as tech stocks.

But all the signs are currently telling us that the world wants more gold. And with such a finite resource and a move away from alternative investments, the price is set to carry on rising.

By Travis Bard

© 2022 Copyright Travis Bard - All Rights Reserved Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.

© 2005-2019 - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.

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