World central banks are aggressively buying gold

Gold had its most successful month since March.

This year, a record amount of gold was purchased by central banks around the world over the course of nine months.

Developing countries' private investors have a preference for the valuable metal.

Gold was unable to remain above the psychologically significant $2,000 mark.

In October, gold saw its best performance since March, increasing by 7.3% to reach $1,984. This surge in demand was likely due to the conflict between Israel and Hamas, which has caused investors to seek out safer assets.

In its third-quarter report, the World Gold Council (WGC) revealed that global central banks had almost doubled their purchases of gold in the third quarter, buying 337 tons of the precious metal compared to the second quarter.

The World Gold Council (WGC) reported that the Central Banks purchased a record 800 tons of gold from January to September of this year, the highest amount since the WGC began keeping track in 2000.

In the third quarter, the People's Bank of China (PBOC) saw a 78-ton increase in its gold reserves, making it the world's largest gold buyer.

The jewelry industry and industry as a whole have consistently shown a high level of interest in the metal, while private investors from developing countries such as India, China, and Russia have also been increasingly drawn to gold.

Private investors from Russia have increased their investments by a third, from 6.5 tons to 8.5 tons. VTB reported that 50 tons of metal have been sold in the form of ingots since the start of the year, which is 56% higher than the same period in 2022.

Investment demand is being hindered by the sale of gold ETFs. According to the results of the previous quarter, ETFs decreased investments by approximately 140 tons.

WGC predicts that central banks will keep buying gold until the end of the year, a trend that has been growing steadily.

The World Gold Council (WGC) believes that, due to the increasing geopolitical tensions and the Central Bank's expected continued active purchases, demand for gold could rise unexpectedly.

The FxPro analyst team is warning that gold storms have reached $2000, but headwinds are increasing, and they give higher odds to a bearish scenario than a bullish one.

It appears that the rationale for selling gold in the present situation is the appealing yield on government bonds. Indications of peak formation are becoming increasingly evident, which could cause a surge of active capital from gold to bonds. Additionally, the deceleration of price growth in developed countries is another significant factor that is diminishing interest in gold as a safeguard against inflation.