(Bloomberg)-The central bank has become a gold seller for the first time since 2010, as some producing countries have used near-record prices to mitigate the blow of the coronavirus pandemic.
According to a report by the World Gold Council, total net sales in the third quarter were 12.1 tons of gold bars, compared with 141.9 tons in the same period last year. WGC stated that sales were driven by Uzbekistan and Turkey, while the Bank of Russia announced its first quarterly sales in 13 years.
Although funds flowing into exchange-traded funds (ETFs) have driven the rise of gold in 2020, central bank purchases have helped to consolidate gold bars in recent years. Citigroup Inc. last month predicted that central bank demand will rebound in 2021
WGC chief analyst Louise Street said: “In this case, it’s not surprising that banks may seek their gold reserves.” “Almost all selling comes from banks, which are financially strained. It was purchased from China at high domestic prices.”
WGC stated that the central banks of Turkey and Uzbekistan sold 22.3 tons and 34.9 tons of gold respectively in the third quarter. As the country of Central Asia emerged from decades of isolation, Uzbekistan has been diversifying its international reserves from gold.
Gold rose to a record high of US$2,075 per ounce in August, and then fell to around US$1,900 per ounce in recent weeks. WGC said that the total demand for gold and silver fell 19% year-on-year to the lowest level since 2009, mainly due to continued weakness in jewelry purchases. Indian jewelry demand has fallen by half, while Chinese jewelry consumption has also fallen.
According to WGC data, the decline in jewelry demand was partially offset by a 21% increase in investor demand. WGC obtained data from the International Monetary Fund and Metals Focus. Gold bars and coins accounted for most of the growth, as funds flowing into exchange-traded funds slowed down from the previous quarter.
The total supply of gold fell by 3% year-on-year. This is because even if South Africa and other producers lifted the Covid-19 restrictions, the mine’s output remained sluggish. The rise in the quarterly recovery rate eased the decline, and consumers profited at high prices.
(Update on the gold price in the sixth paragraph)
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