Saturday, 30 Sep, 2023

Business

Iraq increases gold reserves by 2% in one day

none | banglanews24.com
Update: 2023-05-30 13:58:48
Iraq increases gold reserves by 2% in one day

The central bank of Iraq expanded its gold reserves by 2% in one day last week, Bloomberg reported, stating that a bigger move into gold is in the works.

Iraq purchased 2.5 tons of gold Thursday, increasing its total gold reserves to 132.73 tons, Bloomberg cited Mazin Sabah, director general of the central bank's investments department, as saying.

Sabah said Iraq is pursuing a strategy of gradually adding gold to the country's reserves as a safe-haven alternative. "Our current plan is to buy small quantities over multiple times, not a big quantity in one go," Sabah said.

Central banks bought record amounts of gold last year, boosting reserves with an asset viewed as a safe haven during economic distress and an ongoing de-dollarization trend.

Iraq also used last year's lower prices as an opportunity to resume its gold buying after a four-year pause. Iraq bought 34 tons of gold about a year ago, making it a one-time purchase that increased its gold holdings by 35%. Iraq's gold is stored in England and France.

During the first quarter of this year, central banks added 228 tonnes to their global gold reserves, marking a record pace for the first three months of the year since data collection began in 2000, according to the World Gold Council (WGC). But the numbers can be interpreted in more than one way.

The Q1 central bank demand followed last year's record annual purchases of 1,078 tonnes. And even though the first quarter numbers were up 176% from the same period last year, they were down 45% from Q4 2022 figures and marked a second consecutive quarter of declines. In comparison, central banks purchased 417 tonnes of gold in Q4 2022.

According to Sabah, Iraq's central bank has a price guideline to follow when making additional gold purchases.

Gold posted its third weekly loss on Friday as markets recalibrated for another 25-basis-point rate hike in June after pause expectations were shattered.

June Comex gold futures last traded at $1,942 an ounce, down more than $140 since testing record highs just a few weeks ago. Despite the selloff, year-to-date gold is still up more than 6%.

Macro data is the primary driver weighing on gold right now, TD Securities' global head of commodity strategy Bart Melek told Kitco News.

"The durable goods number, personal spending, and the PCE inflation measures were all broadly above expectations," Melek said. "Not only is inflation not dropping, the Federal Reserve's preferred inflation measure — the core PCE price index — went to 4.7% in April."

Analysts are not ruling out a move lower to $1,900. "Firm support is at around $1,900-$1,896," Melek said.

It is too soon to call a bottom in gold, RJO Futures senior market strategist Frank Cholly told Kitco News. "The market is telling us we will see another rate hike in June and maybe one in July. Gold doesn't like that," Cholly said. "Somewhere between the $1,950-$1,925 range on August futures, traders will find value, and the market will form a base before turning higher."

Source Kitco

BDST: 1357 HRS, MAY 30, 2023
MSK

All rights reserved. Sale, redistribution or reproduction of information/photos/illustrations/video/audio contents on this website in any form without prior permission from banglanews24.com are strictly prohibited and liable to legal action.