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For The First Time In A Decade, Central Banks Sell Gold

By Staff
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For the first time since 2010, central banks have sold gold, taking advantage of the high rates to soften the blow to the economy from COVID-19. According to a report by the World Gold Council, net sales totalled 12.1 tonnes of the bullion in the July-September quarter, compared with purchases of 141.9 tonnes a year earlier.

For The First Time In A Decade, Central Banks Sell Gold
 

The WGC said that the selling was led by Uzbekistan and Turkey, whereas Russia's central bank sold gold for the first time in 13 years. The central banks of Turkey and Uzbekistan sold 22.3 tonnes and 34.9 tonnes of gold, respectively, during the period.

Uzbekistan has been diversifying international reserves away from gold as the central Asian nation unwinds decades of isolation, taking measures towards economic reforms.

Gold prices touched new record highs in India as well as internationally in August. The surge was fueled by inflows into exchange-traded funds (ETFs) as investors sought refuge in the safe-haven asset amid economic uncertainties induced by COVID-19.

However, in the past few years, bulk buying by central banks had helped underpin bullion. Recently, Citigroup Inc predicted that central bank demand would rebound in 2021, after slowing this year from near-record purchases made in both 2018 and 2019.

Overall bullion demand has fallen 19 percent year-on-year to the lowest since 2009 in the September-ended quarter, the WGC said, largely due to continued weakness in jewellery buying. In India alone, the second-largest consumer of gold after China, demand fell by half.

The fall in jewellery demand was partially offset by 21 percent jump in demand from investors through gold ETFs.

Read more about: gold gold price
Story first published: Friday, October 30, 2020, 11:42 [IST]
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