Gold Prices Swelled on Central Bank Buying

SEATTLE (Scrap Monster): The rebound in central bank purchases of bullion has led to rally in gold prices.

The yellow metal prices had been under pressure during the initial months of the current year. After recoveries in April and May, the prices had witnessed strong decline in June, registering its worst month since 2016, mainly on account of strengthening dollar and hawkish outlook by the Fed. It has again started to regain its shine to some extent, following robust purchases by central banks across the globe.

According to latest data published by the World Gold Council (WGC), the net gold purchases by central banks totalled 56.7 tonnes in May this year, significantly higher by 43%, compared with the monthly average in 2021.

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Serbia announced plans to boost its gold holdings from the current level of 36.3 tons to 50 tons, banking on the gold’s ability to offer protection against inflationary and other financial risks. Thailand emerged as the biggest gold purchaser, adding 46.7 tonnes of gold to its reserves in May 2021. Turkey added 8.6 tonnes, whereas India bought 0.9 tonnes. The other key buyers during the month were Brazil, Kazakhstan and Poland, WGC data said.

The rebound in central bank gold purchases has boosted the prospects for gold prices. The anticipated global economic recovery could lead to increased gold purchases by world central banks.