Gold is an important part of central banks' foreign exchange (FX) reserves. According to the International Monetary Fund (IMF), at the end of H1 2018 central banks collectively owned US$1.36tn of gold, around 10% of global FX reserves, reports the World Gold Council.
And central banks are an important part of the gold market: in H1 2018 they accounted for 10% of demand. Looking ahead, the WGC expects central bank demand to remain buoyant.
Diversification will continue to be an important driver of demand, as will the transition to a multipolar currency reserves system over the coming years.
A Solid Start to 2018
Central banks added a net total of 193.3 tonnes (t) of gold to their reserves in the first six months of 2018, an 8% increase from the 178.6t bought in the same period last year. This marks the strongest H1 for central bank gold buying since 2015.
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