The National Bank of Poland purchased 18.7 tonnes of gold in the second quarter of this year, becoming the largest buyer in the world ahead of India and Turkey. During this time, the price of the king of metals exceeded the record level of $2,500 per ounce. The NBP also announced investments in corporate bonds and foreign equities through ETF funds, which may indicate a move to diversify reserves and increase their yield.
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This is not the end of gold shopping!
Demand for this bullion from central banks may continue. This is evidenced, among other things, by the announcement of the President of the National Bank of Poland, Adam Glapinski: ‘We will continue to buy gold. We dream of reaching a 20 percent share of gold in our reserves'. At present, the share of bullion in the NBP's reserves is 14.7 percent and continues to grow.
Source: Conotoxia own study, NBP data
At the end of the second quarter of this year, Poland's gold reserves rose to 377.4 tonnes, and the pace of purchases of the bullion, held mainly in London, at the Bank of England, since April this year has surpassed even the world's largest economies. According to the World Gold Council, Poland was the world leader in Q2 this year alone, buying 18.7 tonnes of gold.
Source: WGC
In Q2 2024, global gold demand, excluding over-the-counter (OTC) investments, fell by 6 percent y/y to 929 tonnes. The decline is mainly due to a 19 percent reduction in jewellery consumption, in response to record high prices for the king of metals. However, including OTC investments, total gold demand increased by 4 percent y/y to reach 1,258 tonnes, the highest level since 2000. Much of this demand was generated by central banks, which increased their purchases by 6 percent, adding 183 tonnes, mainly to protect and diversify their portfolios.
Source: WGC
Is this the end of the rises in gold?
The gold market, like many others, is driven by two forces: demand and supply. In the past few quarters, an increase in demand has been particularly evident. Investors and central banks are keen to buy gold because it is seen as a safe haven, especially during periods of economic and geopolitical uncertainty. Moreover, the continued weakening of the dollar may indicate that gold could outperform other key assets in the near term. Conotoxia Ltd.'s baseline scenario assumes that gold price momentum could slow down by the end of the year, with a possible correction, but is likely to remain above the $2,500 per ounce level.
Source: Conotoxia MT5, XAUUSD, Daily
Grzegorz Dróżdż, CAI MPW, Market Analyst of Conotoxia Ltd. (Conotoxia investment service)
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