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MTrading Team • 2023-10-06

Central Banks Help Gold Resist Rising Bond Yields

Central Banks Help Gold Resist Rising Bond Yields

Central Banks try to help gold resist rising bond yields. Their demand for the yellow metal continues to dominate. Monetary authorities of different countries were reported to purchase 77 tons of the asset letting it hold the critical-long term support level. It all happens with the strengthening U.S. dollar in the background.

The total increase in gold purchasing actions is 38% compared to July deals. On the whole, central banks bought more than 215 tons of gold in the last 3 months. Experts predict the gold demand to remain healthy throughout the next year.

On the other hand, only a small number of central banks have been involved in the purchasing activity despite the robust demand. China is still the top-buying country with 29 tons of the yellow metal purchased in August. In total, the People’s Bank of China managed to increase its gold reserves to 2,165 tons, which exceeds its total foreign reserves by 4%.

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Poland is also on the list of the most significant buyers. The National Bank of Poland bought 18 tons in August. Turkey takes third in the list of top gold buyers with 15 tons purchased in August. The Turkish monetary authority seems to have rebuilt its reserves following the significant selling activity taking place between April and May.

Uzbekistan, India, Czech Republic, and Singapore also found themselves among the most significant gold purchasers with 9 and 2 tons of the precious metal bought during the same period.

The central banks' gold demand appeared to be the main support pillar in the face of rising bond yields and strengthening greenback. It all creates quite a challenging market environment, as investment demand has fallen drastically. It reached the lowest low in the NYSE: GLD since August 2019.

Meanwhile, gold futures for December keep testing the $1,830-per-ounce critical support. Taking into account the current environment and strong selling pressure, analysts predict the gold price to go below $1,800. On the other hand, precious metals are still the main tool that helps central banks keep independent from the monetary chaos triggered by the U.S. dollar.

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