Central Banks' Gold-Buying Spree Reaches 50-Year High
Gold is poised to close out January with a fourth straight monthly gain after the Fed's uber-dovish flip-flop seemed to signal that it’s done raising interest rates (reportedly for a while but that's never happened before)…
The Fed have never, ever “paused” a full hiking cycle. The always end up cutting. Each cutting cycle has led to a recession except mid 1990’s and 1987. Odds are in favour of the Fed having gone too far already and the stock market figuring it out in due course…
— Raoul Pal (@RaoulGMI) January 30, 2019
Which has hurt the dollar, helping gold to its sixth January gains in a row as investors sought a haven against slowing growth and U.S.-China trade disputes.
Bloomberg survey results show a decidedly positive bias on the precious metal (Bullish: 13 Bearish: 2 Neutral: 2)
If the Fed’s rate-hike cycle really has come to an end for now, the sooner-than-expected dollar weakness may help gold to “rise more quickly and more sharply,” Commerzbank said in a note.
“Both the tone and language of the Fed statement and presser appeared more accommodative versus consensus expectations,” Citigroup Inc. analysts including Aakash Doshi wrote in a note. “To take advantage of an ongoing gold market rally, investors might consider positioning for upside.”
“Gold is benefiting from a lower dollar in general, as well as safe-haven buyers hedging against the outcome of the U.S.-China trade talks,” Jeffrey Halley, senior market analyst at Oanda Corp. in Singapore, said in a note.
Still, there’s no guarantee gold will keep appreciating at the same pace.
Ole Hansen, head of commodity strategy at Saxo Bank, said by email. While the bank maintains a bullish view on gold, “some caution may now be warranted,” he said.
“With stocks rallying and emerging market assets receiving a boost, the buy-gold story has faded, at least for now,” Hansen said.
And as BCS Global Markets said in a note, the big range in analysts’ outlook for gold this year shows “that there is actually no consensus."
However, there is one group of global 'investors' who are waving in those bullion trucks with both hands and feet - The world's central banks…
Central banks bought last year the most gold in 47 years, with 651.5 tonnes (74% higher YoY). This is the highest level of annual net purchases since the suspension of dollar convertibility into gold in 1971
https://www.zerohedge.com/news/2019-01-31/central-banks-gold-buying-spree-reaches-50-year-high