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    You are at:Home»Forex Trading»Surging Trend Of Central Banks Increasing Gold Reserve

    Surging Trend Of Central Banks Increasing Gold Reserve

    March 4, 2023Updated:April 23, 20234 Mins Read Forex Trading John WangubaBy John Wanguba
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    Investors are feeling nervous about rate hikes, despite oversold conditions, as the precious metals markets are attempting to rebound this week.

    Several officials of the Federal Reserve have expressed their preference for implementing further increases in interest rates.

    As long as inflation indicators continue to indicate high levels, the interest rate should remain high.

    Certain analysts are advocating for an increase of 50 basis points. However, the markets are expecting a break by the summer.

    On the other hand, Gold and silver can go high if the market stopped and Feds showed some relaxation regarding the interest rate.

    So far this year, there has been a lack of enthusiasm from both general investors and futures market speculators toward precious metals.

    Despite the ongoing strong demand for physical bullion purchases, the spot prices have not experienced significant changes due to insufficient impact.

    Gold Bullion Is Being Aggressively Purchased

    It has been observed that amid fears that the commodities market is likely to see a decline, gold is on the radar of central banks.

    Recently, central banks across the globe are accumulating their gold reserves.

    It seems that central banks have finally realized the importance of having hard currency reserves due to rising geopolitical tensions.

    There are potential dangers that could threaten the U.S. dollar’s position as the global reserve currency. But, yellow metal’s worldwide acceptance is likely to remain untouched.

    Dollar’s Role Can Become More Decisive

    Central banks accumulating gold globally means that demand for gold can see a significant rise.

    Experts also believe that central banks piling up their gold reserves could gold playing a more decisive role in terms of global monetary regulations.

    The FY 2022 has seen the record buying of gold, it seems that 2023 will be similar to that.

    Most recently World’s Gold Council shared that back in the month of January 2023, the world’s central banks purchased 31 tonnes of gold.

    China topped that list, several reports have documented that China purchased 15 tonnes of gold back in January. Last Turkey was the biggest gold buyer.

    Moreover, Russia has taken significant steps to procure gold and urge its trade partners to use precious metals for payments, resulting in a 16% rise in the monthly total.

    Those countries that are targeted by global financial sanctions have a clear motivation to resort to the world’s most widely acknowledged form of asset preservation.

    On the flip side, those countries who are struggling with inflation troubles have also decided to accumulate their gold reserves to give their paper currency some stability.

    Last year, 1100 tons of gold were purchased by global central banks, this accounts for a 150% increase as compared to the previous year’s purchase.

    However, it does not imply that central banks will embrace a genuine gold standard. Nor does this imply that central bankers will adhere to the principles of sound money.

    It can be argued that the one thing that has forced them to do heavy gold purchases is they want to get protected against inflation.

    Moreover, investing in gold can reduce the risks associated with holding financial assets.

    Private Investors Can Also Get Benefit by Accumulating Gold

    Private investors may also retain precious metals in their reserves as a safeguard against inflation and other perils to traditional financial assets.

    But, indeed, the majority of individuals who own physical gold are not preparing for an apocalyptic scenario.

    That is why individual investors are in sixes and sevens when it comes to investing in gold.

    The main concern for the majority of buyers of precious metals is to acquire a physical and durable means of storing value for the long term.

    Private investors are not fond of holding their investments for the longer term. Hence, it can be argued that only central banks will be the biggest buyers of gold in 2023

    But higher demand in the future might send the price of gold high in the future.

    Disclaimer - The content on this website is not financial advice, where aggregated from other websites we have credited each author with a link to source content. Some of the posts (not all) on ForexFounder.com are guest posts or paid posts that are not written by ForexFounder.com authors and the views expressed in these types of posts do not reflect the views of ForexFounder.com. Post under the label Forex Cable are guest posts. We do not represent these services, brands and companies – meaning that any disputes you may have with brands or companies mentioned on our blog will need to be taken care of directly with the specific brands and companies. The responsibility of our readers who may click links in our content and ultimately sign up for that product or service is their own.
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    John Wanguba

    Wanguba Muriuki is an Editor at Large for the Forex Founder and author of the book- “The Exploitative Intrigues of Cryptocurrency Scams Explained” He is also a passionate creator who sees every aspect of life from a written perspective. He loves Blockchain, Cryptocurrency, Technology, and Traveling. He is a widely experienced creative and technical writer. Everything and everyone is describable. The best description is written.

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