Central banks are the more dominant player in the gold market, given that gold investment funds hold approximately 1.6% of the reserves held by central banks.
The IMF (International Monetary Fund) estimates that gold represented just 7% of estimated central bank reserves at the end of 2021. Moves to increase these gold holdings make central banks the price setters for gold. For example, large-scale central bank gold buying over the nine months from Q3 2022 through Q1 2023 amounted to 1,092 tonnes or ~0.50% of total central bank reserves. China could be another gold price driver as it invoices more of its commodity trade in RMB and needs to build gold reserves for convertibility. Both demand vectors are big enough to have a major market impact and, unlike demand from gold investment funds, are price insensitive and strategic.
Reckoning with Inflation
For 30 years, inflation was relatively tame, but it has taken on renewed significance in recent years. We doubt the world can revert to the 2% inflation regime of the “great moderation” of the early 1990s to 2020 (Figure 2). The reasons include the trend to deglobalization as the world becomes more multi-polar, as well as the reshoring of U.S. industrial production and supply chains.
XAUUSD SELL 1976 - 1974💯💯
✅ TP1: 1980
✅ TP2: 1985
✅ TP3: 1990
🛑 SL: 1968
The IMF (International Monetary Fund) estimates that gold represented just 7% of estimated central bank reserves at the end of 2021. Moves to increase these gold holdings make central banks the price setters for gold. For example, large-scale central bank gold buying over the nine months from Q3 2022 through Q1 2023 amounted to 1,092 tonnes or ~0.50% of total central bank reserves. China could be another gold price driver as it invoices more of its commodity trade in RMB and needs to build gold reserves for convertibility. Both demand vectors are big enough to have a major market impact and, unlike demand from gold investment funds, are price insensitive and strategic.
Reckoning with Inflation
For 30 years, inflation was relatively tame, but it has taken on renewed significance in recent years. We doubt the world can revert to the 2% inflation regime of the “great moderation” of the early 1990s to 2020 (Figure 2). The reasons include the trend to deglobalization as the world becomes more multi-polar, as well as the reshoring of U.S. industrial production and supply chains.
XAUUSD SELL 1976 - 1974💯💯
✅ TP1: 1980
✅ TP2: 1985
✅ TP3: 1990
🛑 SL: 1968
