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(Kitco News) – Retail investors are not the only ones buying at the gold rally. The Central Bank of Colombia sold about two-thirds of its gold reserves, according to media reports.
However, the timing of the central bank was a bit off. According to the bank’s reserve data, it sold 9.7 tonnes of gold valued at $ 475 million and represented 67% of its precious metal holdings in June. The sale came two months before the market saw prices push after a half time above $ 2,000 an ounce.
According to the London Bullion Market Association, average gold prices in June averaged about $ 1,734 per ounce, up 14% since the beginning of the year. In the last two months, gold prices are still up 18% before taking significant volatility and profit.
Although Colombia is the last central bank to make headlines this year with the biggest gold sales, they are not just trying to capitalize on rising gold prices.
According to data compiled by the World Gold Council, so far this year some of the biggest sellers included the euro area, which sold 2.8 tonnes of gold, Germany sold 2.9 tonnes, Kazakhstan sold 7 tonnes and Mongolia sold 5 tonnes.
However, central banks remain net buyers of the precious metal. The pace of buying is significantly down from record levels recorded in 2018 and 2019.
Although central banks’ appetites for gold have declined, the World Gold Council expects this sector to remain an essential support for the market.
In June, the World Gold Council conducted its third annual central bank gold survey. According to the results, 20% of central banks that are looking to buy gold this year survive, significantly up from 8% in 2019.
The survey also notes that 88% of central banks see negative interest rates as a relative investment decision to hold gold.
Although Colombia’s central bank may not have sold its gold at the peak, its timing was a lot better than the British government’s. Between 1999 and 2002, the British government sold 401 tonnes of gold – from its 715-tonne holding – at an average price of $ 275 per ounce.
Disclaimer: The views expressed in this article are those of the author and may not reflect those of Kitco Metals Inc. The author has made every effort to ensure the accuracy of the information provided; however, neither does Kitco Metals Inc. nor can the author guarantee such accuracy. This article is strictly for informational purposes only. It is not solicitation to make any exchange in commodities, securities or other financial instruments. Kitco Metals Inc. and the author of this article does not accept any liability for loss and / or damage resulting from the use of this publication.
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