News Bites
Central bank gold buying has been pretty muted recently
(Kitco News) - Central bank gold purchasing has been uninspiring, to say the least of late. Collectively, central banks tipped back into net purchases during the month of February. Around 8.8t were added to global gold reserves.
According to the World Gold Council (WGC), India bought around 11.2t, Uzbekistan 7.2t, Kazakhstan 1.6t, Colombia 0.5t. In terms of the sellers, Turkey sold -11.7t of the yellow metal and this puts year-to-date total global central bank net sales at 16.7t, the weakest start in over a decade. Central banks sold a net 25.5t of gold in January, as combined sales from Turkey and Russia outweighed buying elsewhere.
The WGC say "Selling has predominately come from a small group of central banks whose chunky sales have tipped the balance in certain months. And, as we have discussed before, these sales have been driven by several different factors, such as economic hardship caused by the pandemic, heightened local gold demand, and coin-minting programmes.".
Towards the end of the report, the research team note that they believe central banks will be net purchasers in 2021, but the immediate outlook for central bank demand remains finely balanced.
I think the synopsis for the precious metal is finely balanced as it seems, for now, gold is stuck at the lower end of the recent consolidation range. At the moment the area between $1755/oz and $1676.91/oz is a strong zone and the direction of the breakout could be telling. The next main resistance stands at $1771.60/oz and this was a very strong area of support in the past when the price bounced off the zone on 30th November 2020. Beyond that, there could be some daylight to $1858/oz.
