Central banks turning to gold again, Bank of Thailand buys 43.5 tonnes in April
The German bank, quoting data from the International Monetary Fund, noted that the Bank of Thailand bought 43.5 tonnes of gold in April. Other central banks that added to their gold reserves last month included Uzbekistan, which bought 8.4 tonnes of gold, Kazakhstan, which increased its holding by 4.4 tons.
Commerzbank also noted that in March, India's central bank bought 6.8 tonnes of gold and Cambodia's central bank bought 5 tonnes of the precious metal.
Central Banks' renewed interest in gold comes after subdued activity in the first quarter. According to the World Gold Council (WGC), central banks bought 95.5 tonnes of gold between January and March, a decline of 23% compared to purchases made during the first quarter of 2020.
In its quarter trends report, the WGC said that purchases in the first quarter were in line with the activity seen between 2016 and 2017.
Although the WGC expects that central banks will be net gold buyers this year, the analysts have said that the outlook is a "little cloudy."
"Large, sporadic purchases and sales in recent months have made it difficult to determine a direction of travel for central bank demand in the short term. But our expectation remains for continued overall net buying for the year, as we believe positive sentiment towards gold is largely unchanged among the central banking community," WGC analysts said in their Q1 report.
The World Gold Council will unveil more insight into central bank gold demand when it publishes its annual Central Bank Gold Survey later this quarter.
Analysts at Commerzbank said that renewed central bank demand will be an important pillar of support for the gold market. The comments come as gold prices have pushed back above $1,900 an ounce and the market is on track to turn positive for the year.
"Coupled with the higher consumer demand that is expected and reviving investment demand, we believe this should lend buoyancy to the gold price," the analysts said.
Technical analysts at the German bank said that it is only a matter of time before prices push back above $2,000 an ounce.