Central Bank Gold Demand Still On Track To Hit Highest Level Since 1964

Published on International Business Times (http://www.ibtimes.com)

Central Bank Gold Demand Still On Track To Hit Highest Level Since 1964; Despite Q3 Dip

By Moran Zhang | November 15 2012 7:30 AM

Central banks continued to purchase gold in the third quarter at near-record pace, driven by emerging market central banks looking to diversify away from traditional reserve currencies amid heightened economic insecurity and continuous unconventional monetary easing, according to World Gold Council data released Thursday.


Gold reserves at central banks increased by 97.6 metric tons during the July-September period, albeit at a slower pace compared with a record year-ago quarter. The official sector accounted for 9 percent of overall gold demand during the third quarter.

“I wouldn’t emphasize the fall of 31 percent [from a year ago],” said Marcus Grubb, managing director for investment at the WGC. “Anything close to 100 tons is very high by the last 15 years.”

World’s central banks collectively bought 374 tons of gold in the first nine months of this year. That’s higher than last year’s 343 tons for the same period.

“We still think we might beat last year’s total for central banks of 456 tons, though it’s going to depend on Q4,” Grubb said. “[This year will likely come in at] somewhere between 455 tons and 500 tons, which will be another record since the early 1960s.”

Diversification of reserve assets remains the driving force behind gold demand by central banks and purchases of a similar order of magnitude are expected for the fourth quarter.

Official sector demand is likely to act as a fairly solid pillar of demand going forward.

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