Last year marked the 14th straight year of net central bank buying. Central banks’ gold usage for reserve management and diversification has increased as they have sought to reduce over-concentrations in current global reserve currencies (FX reserves) like the US dollar and the euro.
Backed by significant central bank purchases and robust investment demand from China, gold has demonstrated strong momentum this year and rallied 13% through the end of June. We don’t see any change in the persistency in these two secular drivers. What’s more, we see a third driver going forward.
First driver: central banks
