Tags: central | bank | Russia | gold

Reduced Central Bank Buying Weighs on Gold

By    |   Wednesday, 30 October 2013 09:34 AM

Central banks, particularly those in emerging markets, have cut their gold purchases recently, helping to keep the price of the precious metal down.

Gold has dropped 20 percent so far this year, with the spot price trading at $1,355 early Wednesday.

Central banks as a whole became net buyers of gold in 2010, The Wall Street Journal reports. Emerging-market central banks were putting some of their bountiful foreign exchange, obtained through trade surpluses, into the metal.

Editor's Note:
Get Tom Luongo's Gold Stock Adviser — Click Here Now!

But now emerging-market central banks have to worry about domestic economic problems and weak currencies, according to The Journal.

At the current pace, central banks will trim their gold buying by 34 percent in 2013, according to Thomson Reuters GFMS. In 2011-12 central banks lifted their purchases, according to the International Monetary Fund, the paper reports.

Russia, which accounts for 30 percent of all central bank gold purchases reported to the IMF, dumped 12,000 ounce of gold in September, its first monthly sale in a year, the IMF says, according to The Journal.

Central banks' reluctance to buy is bad news for gold.

"It really does blunt the support that gold has," Jeff Wright, an analyst with H.C. Wainwright, tells The Journal.

To be sure, gold reached a five-week high Monday, with the December Comex futures contract hitting $1,361.80.

"From a technical perspective, $1,360 marks an important resistance level which the gold price first has to lastingly overcome if it is to climb any further," according to a commentary from Commerzbank analysts obtained by MarketWatch.

Editor's Note: Get Tom Luongo's Gold Stock Adviser — Click Here Now!

Related Stories:

Gold Demand in Asia Seen Surging by HSBC as Inflation Fans Sales

US Commodity Funds' Hyland: Gold Has Little Value as Inflation, Crisis Hedge

© 2019 Newsmax Finance. All rights reserved.

   
1Like our page
2Share
Markets
Central banks, particularly those in emerging markets, have cut their gold purchases recently, helping to keep the price of the precious metal down.
central,bank,Russia,gold
300
2013-34-30
Wednesday, 30 October 2013 09:34 AM
Newsmax Media, Inc.
 

Newsmax, Moneynews, Newsmax Health, and Independent. American. are registered trademarks of Newsmax Media, Inc. Newsmax TV, and Newsmax World are trademarks of Newsmax Media, Inc.

NEWSMAX.COM
MONEYNEWS.COM
© Newsmax Media, Inc.
All Rights Reserved