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Peter Davis

An writer at FOMOdrive

  • Jun 19, 2023
  • 2 min read

Major central banks aggressively buying gold

For the first quarter, central banks acquired an unprecedented amount of gold.

A potential recession could result in substantial investments in precious metals.

It is anticipated by JPMorgan that investors will abandon gold and high-tech stocks during a recession.

According to the World Gold Council's quarterly report, the world's leading central banks increased their gold reserves by a record 228 tons in the first quarter of 2020 - the highest amount since the collection of such statistics began in 2000, as reported by RBC.

In the last quarter, the volume of purchases of world securities exceeded the previous record of the first quarter in 2013 by 34%. Singapore, China, Turkey and India were the biggest purchasers of the valuable metal.

The World Gold Council's report emphasizes the importance of gold as a secure investment in light of the banking industry's instability, geopolitical conflicts, and economic hardship.

A recession in the developed world could be on the horizon, which could increase the demand for gold investments this year. This is especially true when taking into account the weakening of the US dollar and the reduction of rate hikes.

In 2022, global gold demand was at a record high of 1,136 tons, with central banks accounting for nearly a quarter of that amount. This is the highest volume of purchases in the last 55 years.

JPMorgan predicts that investors will be more likely to invest in gold and technology stocks while selling the dollar in order to guard against a potential US recession in 2020.

Demand for gold has increased due to the US banking crisis, as it is viewed as a way to benefit from monetary easing and as a safeguard in the event of a "catastrophic scenario" occurring.

Bank of America declared at the end of April that investing in gold is a wise decision, as it is a defensive asset that can protect against high inflation.

The FxPro analyst team predicts that the dynamics of the market will allow for further growth beyond the current entry into the $2,000 area, rather than the end of a long rally as it was before. They believe that prices will soon reach above $2050 - $2075, with historical peaks being updated in the coming weeks.

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