Central banks and consumers in India and China are raising hopes of a recovery in the gold buying market, which has been sold this year by a wave driven by the external flow of large exchange trade funds.
Metal temporary recovery has begun in the last twenty-five years, with a handful of some bullish factors changing, increasing by about 2 percent.
The two indicators point to strong demand in China, the world’s largest consumer. Gold prices in the country have traded at a premium to international prices in recent weeks compared to the 2020 discount. At the same time, the amount of gold extracted from the Shanghai Gold Exchange doubled from a year earlier to 186 tons, according to exchange data.
According to John Reid, chief market strategist at the World Gold Council, most of this gold will be used to reuse equipment in manufacturing and retail sectors after a strong period after the Chinese Lunar New Year period in February.
“This is a reflection of the fact that demand was strong and is expected to be modest going forward,” he said.
According to Bloomberg, demand for gold jewelry has also returned to India, where imports hit a nearly two-year high in March, Bloomberg reported.
“The sea has changed in the mindset of Asia,” said Rona O’Connell, an analyst at London-based brokerage StoneX. He said if the central bank’s demand for gold remained strong, it could provide a floor for gold prices, he said.
According to the World Gold Council, central banks bought 7.8 tonnes of gold in February, a body made up of gold mining bodies under the World Gold Council, led by India, Uzbekistan, Kazakhstan and Colombia.
Yet, overall, in the first two months of the year, the central banks were metal net sellers, led by Turkey with a total sales of 1 ton ton – the weakest start in more than a decade.
Hungary said last week that its gold volume had risen from 32 tonnes to 95 tonnes in March “after the country’s long-term national and economic policy strategy was targeted”.
“The presence of a global spike in government debts or inflation concerns further increases the importance of gold in the national strategy as a safe-haven asset and valuable resource,” the Hungarian central bank said. Dr..
Despite the recent pickup of gold, gold prices rose by more than 6 percent in 2021 as investors shifted money into equities after the rollout of coronavirus vaccines in the United States and Europe. The precious metal has moved out of the partnership due to rising bond yields, which makes gold less attractive because it does not provide investors with a fixed income flow.
Analysts say gold-backed exchanges flow uninterruptedly from trade funds. Funds, which can be bought and sold like a stock Responsible More than $ 2000 per ounce to drive a gold car last August.
Since November 2020, according to the World Gold Council, the ETF holding tonnage of gold has fallen by about 9 percent as a result of “almost a loss in gold prices over the same period.” Holdings of gold-backed ETFs fell by 108 tons, or 6 6 billion, in March alone – the fourth month in a row.
O’Connell said investors would need to make sure physical demand was returning.
“As the physical market strengthens, it can absorb the metal from ETFs, at one point helping to keep the cushion from weakening,” he said.