Gold price crashes trigger massive central bank buying
19 March 2012
Sharp downside moves in gold prices are triggering massive central bank buying. Gold purchases by central banks have been on the rise over the past years as the unrelenting financial crisis threatens the function of the global economic system.
The Financial Times quoted several traders as saying that the sharp price corrections in gold had triggered large purchases by the central banks in recent weeks. The traders state that the Bank of International Settlements, which acts on behalf of the central banks, have been buying significant quantities of gold when gold prices fell. Estimates run into 4-5 tonnes worth $250-$300 million.
In 2010, central banks had become net buyers of gold first time since 1988 whereas in 2011, buying rose to a record 439.7 tonnes- a massive 570% increase over 2010.