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Central Banks Stop Buying Gold: What It Means For the Gold Price

Central banks stopped buying gold

Central banks stopped buying gold
CONTENT

  • Gold demand fell to 2009 levels

  • Turkey and Uzbekistan remain the main consumers of gold

  • Institutional investors prefer to invest in MTC over gold

International consortium of news organizations developing transparency standards.

The demand for the precious metal has been steadily decreasing since the beginning of August this year. In the third quarter, the demand for gold decreased by 19% and amounted to 829 tons.

Uzbekistan and Turkey remain adherents of gold

In the third quarter of this year, demand for gold in the world fell by 19% and amounted to only 829.3 tons, which is a record low. The last time such a low demand for the precious metal was observed only in 2009. Since the beginning of the year, the demand for gold has amounted to 2,972.1 tons, which is 10% lower than in the same period in 2019. Such data are provided in the analytical report of the GoldHub company.

Central banks stopped buying gold

While jewelry demand has improved from a record low in the second quarter, the combination of continued social constraints, economic downturn and high gold prices have proven burdensome for many jewelry buyers: demand was only 333 tons, down 29% from 2019..

“In contrast, the demand for bullion and coins rose 49% to 222.1 tonnes. Much of the growth came from official coins due to the continued high demand for gold in Western markets and in Turkey, where coins are the most common form of investment in gold, ”the report said..

The third quarter also continued to flow into gold-backed ETFs, albeit at a slower pace than in the first half. Investors around the world have increased their precious metal reserves by 272.5 tons.

Central banks generated small net gold sales in the third quarter. Most of the sales were recorded in Turkey and Uzbekistan, where banks were actively selling gold to the population..

In general, the demand for gold in the world returned to the indicators of 2009.

Gold demand for 2009-2020

Amid falling popularity and demand for gold, the cryptocurrency continues to strengthen and attract new institutional investors and whales.

The latest research of the cryptocurrency exchange OKEX, together with the analytical company Catallact, proves that large investors are actively accumulating bitcoins in anticipation of a price increase. Also, analysts have identified a certain pattern – the number of institutional investments increases sharply immediately after the statements of large funds about investing in cryptocurrency.

Central banks stopped buying gold

In May 2020, renowned macro investor Paul Tudor Jones announced that his fund would invest in BTC futures to protect assets from inflation. Immediately after Jones’ speech, it was reported in the media that the Nasdaq-registered business analytics company MicroStrategy acquired 21,454 BTC worth more than $ 250 million to protect its coffers from fiat inflation..

This caused a surge in institutional investment in the market. Catallact cites statistics that in June-August 2020, the number of large transactions in MTC, from 5,000 to 10,000 BTC, increased.

However, traditional investors do not share the optimism of the whales in their quest to buy Bitcoin. For example, Europac CEO and proponent of investing in gold, Peter Schiff, stated that “Bitcoin is the biggest bubble he has ever seen.” Schiff wrote about this on his Twitter page..

Recall that Peter Schiff has repeatedly criticized bitcoin, calling cryptocurrencies a “bubble” and promised them an early fall to minimum levels..

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