The latest Global Gold Demand Trends Report, released by the World Gold Association, shows that the purchase of gold by multinational central banks has spurred gold demand, with an increase of 228 tons in official global gold reserves in the first quarter, creating a new record high.
It is worth noting that the Chinese Central Bank’s gold reserve has increased for six months. On 7 May, the National Exchange Authority statistics show that, as at the end of April 2023, the Central Bank of China had a gold reserve of 6.76 million yuan renminbi, and at the end of March it was 6.5 million yuan renminbi, an increase of 260,000 yuan renminbi.
On 4 May, the international debt overwhelmed US$ 2080, creating a new record, and last week, when United States non-agricultural employment data were released, the price was dropped to the near US$ 2000. Nevertheless, with the expectation of an overseas economic recession and the suspension of the United States deposit in June, the price seemed to have fallen short. The Senior Market Analyst of the World Gold Association, Louise Street, stated to journalists that “as some economies are on the brink of recession, gold may be the focus of long-term strategic assets. In the past seven economic recessions, five times the gold investment is going to yield.”
Global central banks continue to grow gold
In the first quarter of this year, the banking sector has a risk-led market. The role of gold in the international reserve investment portfolio has been highlighted by official large-scale continuing purchases during critical periods of market volatility and increased risk.
In the third quarter of 2022, there was a large-scale increase in the central bank gold reserve, with a healthy increase in gold reserves in the first quarter of this year, with an increase of 228 tons in global reserves and a peak value since the first quarter of 2013 (171 tons, a 34 per cent increase in the ring ratio). “The central banks of some developed countries have begun to join the ranks of the additional deposit, with the notable increase of 68 tons in the Central Bank of Singapore, 58 tons in the Central Bank of China immediately followed, and Turkey in the third, fourth, India, fifth, the European Central Bank, followed by the Czech and Philippines.”
In particular, the gross reserve of gold in the Central Bank of China has reached 2068 tons. As of the end of April 2023, the Central Bank of China, the gold reserve, which had increased for six months. Since the opening of this additional gold in November last year’s Central Bank of China, the Central Bank of China has increased its gold reserve from 6.64 million to 66.76 million yuan renminbi at the end of April this year, with a cumulative increase of 4.1 million yuan renminbi.
In fact, global gold investment needs have been uneven over a quarter. The reflow of gold ETF in March, driven by systemic risk in the United States economy, partially offset the January and February outflows, which reduced the entire quarter to 29 tons.
By the end of the quarter, the total management assets of the gold ETF in the Chinese market had reached $3.2 billion, with a small outflow of $45 million. The ETF holdings were relatively stable in one quarter, at 50.6 tons, a small decrease of 0.8 tons. Between January and February of this year, the risk preferences of Chinese investors increased, leading to a significant outflow of gold ETF; in March, the sum of outflows in January and February could not be offset by large inflows.
Data show that, despite significant changes in major markets, investment requirements in both gold and yuan have increased by 5 to 302 tons. The United States dollar and currency requirements reached 32 tons in the first quarter, the highest level in the quarter since 2010, driven mainly by economic downturn concerns and averted sentiments in the banking sector. This growth has helped offset weak demand in Europe, particularly in Germany, where demand declined by 73 per cent. The significant decline in German demand was due mainly to the positive conversion of real interest rates and the increase in euro prices, which contributed to a return of profit.
In comparison, global ration consumption demand for the first quarter was relatively modest, at 478 tons. However, China experienced a return of ration consumption requirements in the first quarter, amounting to 198 tons.
“China’s quarterly gold cover demand performance offsets India’s weak demand, and India’s consumption was 78 tons in the first quarter of 2023, a 17 per cent decline. The significant increase in domestic gold prices in India has become a major factor affecting consumption.” Wang Yingfan told journalists that China’s gold-filling needs were the highest in the year 2015. There has also been a significant recovery in both gold and currency requirements over a quarter. The improvement in economic growth, coupled with a marked increase in gold prices, has stimulated interest by investors in physical gold.
In the view of the industry, seasonal factors, rising prices of people’s currencies and consumer “retaliatory” tourism expenditures could lead to a decline in demand for ration in the second quarter. However, sustained economic recovery and the previously depressed need for celebratory maturing are likely to contribute to the need for ration in the second quarter.
On the supply side, the total global supply of gold increased slightly in the first quarter to 1174 tons, with a small increase of 2 per cent in mine yields and a 5 per cent increase in gold recovery, driven by higher gold prices.
Gold poles
Last week, international debt created a new record of US$ 2080, which is now being withdrawn to near US$ 2020. However, gold remains stagnant.
On the same day, in the early hours of the United States Mission announced an upward adjustment in interest rates of between 25BP and 5.00 to 5.25 per cent. In the accompanying monetary policy statement, UNAF undertook a number of key updates, in particular the dilution of the reference to the anticipated “additional policy contraction” (i.e., the interpretation of interest), and the deletion of the reference to “adjustment between future target areas” of interest rates. Nick Timiraos, journalist in the Wall Street Journal, known as the New American Federation News Agency, stated that “the wording used in the statement was roughly similar to that used by officials when they ended their debt in 2006, and did not make a clear commitment to suspend interest by retaining the bias of the tightening policy”.
The Panel’s Senior Analyst, Lazarda (Fawad Razaqzada), informed journalists that the Associated Reserve might have been exhausted, but that the European Central Bank would take additional austerity measures, which would be good gold. In particular, at the end of the two major central bank meetings, precious metals were raised. WWF has suggested that this may be the last time in the current cycle, while the Governor of the European Central Bank, Landard, stated that “It is clear that the European Central Bank will not suspend interest” and added that “we have more to consider”. The difference between the euro zone and the monetary policy of the United States