(Bloomberg Opinion) — Here’s another factor to add to the gyrations in the gold price over the past few weeks: The biggest players in the market may be losing their buying appetite.
Russia’s central bank, one of the world’s largest gold buyers in recent years, is halting all purchases of the metal. It’s not alone: Uzbekistan and Kazakhstan, whose central banks have also been reliable consumers of late, have also slowed down.
Rolling three-month additions to official sector gold holdings (those held by central banks and international institutions such as the International Monetary Fund) in January amounted to just 67 metric tons, the slowest pace since August 2018.
The official sector owns about a fifth of the gold that was ever mined, and was the biggest buyer last year after jewelry consumers. The last time it turned a net seller, in the 1990s and early 2000s, gold prices cratered. Should history repeat itself, the current spike in the market would quickly wilt.
It’s hardly surprising that the world’s most solid institutions should be holding back on purchasing a flight-to-safety asset at a time when nervier private holders are driving up its price.
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