Last year the Central Banks took a break from buying the yellow metal, interest is picking up again as Hungary now triples its reserves. Hungary’s Central Bank increased to 95.5 metric tons from 31.5 tons which is one of the most significant central bank purchasers in the last decade. This was an official statement released on Wednesday. This decision was based on economic policy strategy and the need to manage risks associated with the COVID 19 pandemic the Central Bank stated. The Central Bank has stated Gold is one of the most crucial reserve assets worldwide as it carries no credit risks. Poland was a close second buying 94.9 tons. Purchases are still led by India !
Central banks no doubt have kept gold prices elevated, however prices started to descend from August highs last year as the central banks began liquidating reserves. January and February saw some of the weakest starts to the year with net sales of 16.7 tons according to the World Gold Council. This seems to be redirecting here not only as Hungary accumulates but Poland’s central bank has stated they would be looking to buy 100 tons of gold in the near term.
“I think we will continue to see Central Banks accumulate during 2021, the gold price has shifted upward after a double bottom. If we break 1800 and this holds we may see a rally after 9 months of hibernation as rising yields and inflation risks are at the amongst us.” Karim Rayani CEOdigest Author.