LONDON (Commodity Online): Central-bank purchases to be a bulwark of the long-term gold rally, said HSBC in a research note.
According to bank, a World Gold Council report estimating that central-bank gold purchases may have hit 450 metric tons in 2011. This means the official sector outstripped gold exchange-traded-fund demand of 155 tons last year by almost threefold.
“The outlook for central-bank gold purchases remains positive for this year, based on the likelihood that emerging-markets central banks will continue to diversify away from the USD,” HSBC said.
“If the U.S. continues to run substantial trade and current account deficits, then according to economic theory, the USD reserves of those countries that the U.S. runs a trade deficit with will rise. Since USD foreign-exchange holdings are already at record levels in many countries, we believe these nations will seek to increase gold reserves, in a bid to diversify their USD-laden reserves,” HSBC concluded.
