Poland joins other countries, buyers of gold. Can bullion gain in value?

10.05.2023 10:11|Analyst Team, Conotoxia Ltd.

Poland became another country that increased its gold reserves, buying around 15 tonnes in April. According to data from the International Monetary Fund, central banks' global gold reserves remained virtually unchanged in March this year, meaning that purchases made equalled sales. China announced the fifth consecutive month of growth in its gold reserves, purchasing 18 tonnes in March, while Singapore increased its reserves by 17 tonnes (to 222t), an increase of 45 per cent over the end of 2022. What can we expect in the near future for the precious bullion market?

Scale of NBP purchases and reserves

The National Bank of Poland increased its gold reserves by around 15 tonnes in April 2023, to a total of 243.5 t. Poland is now ranked 22nd in the global ranking of central banks in terms of gold and third in the Central and Eastern European region, after Russia and Turkey.

According to a World Gold Council (WGC) report, central bank demand in Q1 2023 reached 228 tonnes, with interest in gold driven by global economic uncertainty and investors' search for a safe haven, the Federal Reserve's interest rate policy turnaround and problems in the US banking sector.

Source: Data NBP

Stabilisation of demand and supply in March

According to the WGC report, gold sales in March were driven primarily by Turkey (purchase of 15 tonnes), Uzbekistan (purchase of 11 tonnes) and Kazakhstan (purchase of 10 tonnes). Russia showed a decrease in reserves of 3 tonnes during the period after sending previously unreported information dated from February 2022. This gave an equalisation of demand and supply on central bank operations. Nonetheless, with the beginning of April, we could see gold prices break through the US$2,000 per ounce level. As we pointed out in our article on assets correlations, gold prices have historically been most correlated with silver (correlation 0.79), platinum (correlation 0.58) and the dollar index (correlation minus 0.4). The latter can be considered as one of the fundamental factors for the price of gold (valued in this currency). Since September last year, we have seen a strong change in the trend of the USD index to a downward trend, and a further weakening of this currency could be a factor in favour of further increases in the price of the precious metal. Nonetheless, ultimately the main factor driving the price is supply and demand, which oscillated close to equilibrium in March.

Source: https://www.gold.org/goldhub/gold-focus/2023/05/global-central-bank-gold-reserves-remained-flat-march

Source: Conotoxia MT5, XAUUSD, Daily

 

Grzegorz Dróżdż, CAI, Market Analyst of Conotoxia Ltd. (Conotoxia investment service)

Materials, analysis and opinions contained, referenced or provided herein are intended solely for informational and educational purposes. Personal opinion of the author does not represent and should not be constructed as a statement or an investment advice made by Conotoxia Ltd. All indiscriminate reliance on illustrative or informational materials may lead to losses. Past performance is not a reliable indicator of future results.

CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 73.18% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.

Like the article?
Share it with friends!


See also:

May 9, 2023 11:00 am

Investment legend Carl Icahn under pressure following publication of Hindenburg Research report, or how reputation obscured reality

May 8, 2023 3:37 pm

Apple launched a savings account - what inspired it, and what could be the next steps?

May 4, 2023 3:20 pm

Contraction in the stock market - is this a chance to catch a bargain?

Apr 28, 2023 12:31 pm

U.S. quarter-on-quarter GDP growth came out lower than expected. What does this mean for the Fed?

Apr 27, 2023 2:25 pm

Microsoft's plan to acquire Activision Blizzard is under threat as regulators block the deal: what's next?

Apr 27, 2023 10:28 am

What to look out for before investing and what mistakes to avoid using the example of major investors

76.23% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.

CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 76.23% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
Trading on CFDs is provided by Conotoxia Ltd. (CySEC no.336/17), which has the right to use the Conotoxia trademark.