Central banks may be regaining their appetite for buying gold after staying on the sidelines for the past year.
Central banks from Serbia to Thailand have been adding to gold holdings and Ghana recently announced plans for purchases, as the specter of accelerating inflation looms and a recovery in global trade provides the firepower to make purchases. A rebound in buying — which had dropped to the lowest in a decade — would bolster the prospects for gold prices as some other sources of demand falter.
“Long term, gold is the most significant guardian and guarantor of protection against inflationary and other forms of financial risks,” said the National Bank of Serbia. Serbian President Aleksandar Vucic recently announced the central bank intends to boost holdings of the precious metal to 50 tons from 36.3 tons.
Bullion has come under pressure this year as higher bond yields made the non-interest bearing haven seem less attractive to investors. After recovering in April and May, gold fell by the most in more than four years last month as the Federal Reserve turned more hawkish and the dollar strengthened.