Sharps Pixley: Central Banks Hanging Onto Their Gold
Friday October 4, 2013 7:55 AM
Central banks are hanging onto their gold despite weaker sentiment on the part of some investors, says Sharps Pixley. As of a research note from the U.K. bullion dealer, gold futures were down 1.55% for the week although had bounced from the low and were back above $1,300. The most recent data from the International Monetary Fund, released in late September, showed central banks remained net buyers in August. “Although the gold prices are holding above $1,300 in light of the uncertainty surrounding the U.S. budget and debt limit, the gold-backed ETP (exchange-traded-product) holdings have dropped another five metric tons in October after falling 25 metric tons in September and 708 metric tons year-to-date,” Sharps Pixley says. “The continuous decline in holdings reflects a further weakening in gold sentiment despite the uncertainty in the U.S. When gold prices dropped almost 5% in September, the gold premium in China also did not rise as high as expected. The ones who beg to differ are the central bankers who have either held on or added to their gold reserves this year, viewing gold as an important diversifier.”