The World Golden Council (WGC) published an annual research. WGC states that it continues to see the central banks around the world as an important reserve asset. He also expects them to continue to buy gold for 2022. In the light of these developments, analysts share their expectations of gold.
Why do central banks buy gold?
WGC, Wednesday, 57 Central Bank’s results in the results of the annual Central Bank Gold Reserves (CBGR) survey, he said. 25 %of the respondents announced that they expect to increase their valuable metal reserves in the next 12 months. In the 2021 survey, 21 %of the respondents planned to increase their gold assets. Analysts include the following in the report:
The expected changes in the international monetary system and concerns about increasing economic risks in reserve money economies are also important factors. However, the planned acquisitions are mainly due to increasing concern about a possible global financial crisis.
WGC, this year’s questionnaire in the developed economies of the central banks in the rising markets and developing economies (EMDE) underlined a new distinction between the central banks, he said. The report states that 25 %of the central banks who want to buy are from EMDE countries. In total, 80 %of EMDE central banks expect global gold reserves to increase next year. In the WGC report, he makes the following assessment:
The results show that these banks tend to see the gold as a more important component of general reserve management strategies, especially at a time when risk -reducing assets are needed.
So why do central banks hold the gold?
The biggest reason for the answers of the central banks is its historical location. Last year, most Central Bank said that he had held gold because of his performance during crisis times. This justification fell to the second place this year.
The first five reasons can be summarized as follows: Central banks see gold as a long -term value/inflation hedge tool. In addition, there is no risk of default. It is also an effective portfolio diversion. Analysts make the following assessment:
There is a more challenging economic and geopolitical environment. For this reason, the Central Bank’s demand for gold is likely to remain strong. Because the safe port and inflation features of gold strengthen the belief of central banks.
“The long -term look for gold needs to revolve around it”
A market analyst says the gold market is trapped in a three -week waiting model. He also says he will continue to be consolidated until the next week’s federal reserve monetary policy meeting.
Rhona O’Connell, President of Stonex’s Market Analysis for EMEA and Asia, has published last weekly analysis. Analyst says that gold investors look at possible unexpected reactions after the next week’s announcement. In addition, he says they need to focus on larger painting.
Meanwhile, gold prices continue to be traded at $ 1,850. Despite the Fed’s aggressive monetary policy stance, markets estimates that interest rates will reach 3.50 %at the end of the year. However, inflation pressure will remain high. In this context, Rhona O’Connell says:
Currently, the US’s two -year interest rates are 2.7 %and headline inflation is 8.2 %. However, there are some results to be removed from annual calculations. The headlines related to interest rate hikes are likely to lead to sudden reactions in the markets. However, for the precious metal, the long -term view needs to rotate around permanent negative real interest rates.
“Basic financial parameters continue to support gold”
Markets will continue to pricing significant interest rate hikes throughout the summer. In contrast, O’Connell notes that there is still a lot of uncertainty about how the Fed’s balance sheet will comply with existing monetary policies. Kriptokoin.comAs we have reported as this month, the Fed began to reduce its balance 47.5 billion dollars. Until September, the balance sheet will start to reduce $ 95 billion. In this context, the analyst makes the following assessment:
Tightening gives natural vitality to bond interest rates. It is also possible for this to allow the Fed to be less aggressive than the bond markets in interest rate hikes. So, the basic financial parameters continue to be supportive for yellow metal. However, professional markets still do not commit any size.
“We were relieved to see that the flow of gold ETFs was the most powerful in a month”
City Index Senior Market Analyst Matt Simpson shared gold estimates. Analyst draws attention to the following levels:
Gold provided support around $ 1,848 yesterday. In addition, a series of higher bottoms, today, around $ 1,850 looks quite comfortable.
As it is known, Monthly US Consumer Price Index (CPI) data will be announced on Friday. According to the Reuters survey, economists expect annual inflation to be 8.3 %. Matt Simpson says:
We will probably have to wait until tomorrow’s CPI report before seeing a sustainable movement in both directions. However, yesterday, we were relieved to see that the Golden ETF streams were the most powerful in a month.
“Uncertainty is currently holding the price of gold in a range”
SPDR Gold Trust is the world’s largest gold -supported ETF. His shares rose from 1,063.06 tons of Tuesday to 0.2 %on Wednesday to 1,065,39 tons. Airguide Corporate Consultancy Director Michael Langford’s gold estimation is as follows:
Uncertainty is currently holding the price of gold in a range. However, the tendency has clearly declined since April. In addition, the most important problem faced by gold is that it does not return in the rising interest environment.
