2023-07-06 11:48:00
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Investing.com – Unprecedented domestic demand for gold continues to weigh on Turkey’s official reserves, as Turkey’s central bank, the largest gold buyer last year, sold large quantities of the precious metal in May, bucking the market trend, according to the latest report from the Gold Council. Global.
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Record sales of gold
In a report published on Wednesday, Krishan Gopaul, chief analyst at the World Gold Council, said that central banks’ total reserves of gold fell by 27 tons in May despite continued buying. That is less than half of the net sales of 69 tons in April.
Gobul pointed out that the central bank led this trend in terms of sales volume. According to the council’s report, Turkey sold nearly 63 tons of gold in May.
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“Since March, central banks have sold nearly 160 tons, equivalent to their cumulative purchases over the previous 12 months, and with the exception of Turkey’s sales, the positive trend with regard to central bank purchases of gold continued,” Gobul wrote in the report.
Gobul indicated that there were specific factors behind Turkey’s gold sales this year. As the nation experienced crippling levels of inflation, consumers were buying gold to protect their purchasing power.
The central bank was forced to sell its gold to meet domestic demand, as the government took steps to limit gold imports to keep the trade deficit in check.
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Turkey has seen lower inflation over the past eight months, but it is still very high, rising by 38.2% in the past 12 months as of June.
Other net gold sellers included the Central Bank of Uzbekistan, which sold 11 tons of gold, while the National Bank of Kazakhstan reduced its gold reserves by 2 tons, and the Bundesbank sold 2 tons of gold in May.
gold purchases
On the long side, gold buyers were led by the Polish National Bank last month, increasing its reserves by 19 tons. The recent purchases pushed Poland’s gold reserves to a record 263 tons.
Meanwhile, the People’s Bank of China bought more gold for the seventh consecutive month, increasing its reserves by 16 tons in May. And the Central Bank of Singapore bought 4 tons of gold. The Central Bank of India, the Czech Republic and the Kyrgyz Republic each increased their gold reserves by two tons.
Gobul also noted that Russia had increased its gold reserves by 3 tons; However, he added that the Russian National Wealth Fund has reduced its gold holdings by 37 tons since the beginning of the year.
“There is little publicly available information regarding this activity, but suggestions suggest that gold (and yuan) sales have been used to finance Russia’s budget deficit,” he said.
Gobul also confirmed earlier reports that the Central Bank of Iran bought more than 2 tons of gold in May.
Given Turkey’s impact on central bank gold demand, analysts said continued central bank purchases will continue to support gold prices through 2023.
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