► In the fourth quarter, central banks added another 229 tons to the global official gold reserves, bringing the annual demand to 1,037 tons, just below the record of 1,082 tons in 2022.
► Klaas Knot: “The balance of De Nederlandsche Bank is solid; we also have a gold reserve... which we certainly will not sell.”
► Jerome Powell has indicated that it is unlikely the central bank will be comfortable enough with inflation developments to lower interest rates before the meeting on March 20th.
In 2023, the demand for gold from central banks, a key driver for the gold market in recent years, remained strong. In the fourth quarter, they added another 229 tons to the global official gold reserves, bringing the annual demand to 1,037 tons, just under the record of 1,082 tons in 2022. This brings the total official global gold reserve to an estimated 36,700 tons.
SOURCE: world gold council
Over the past two years, central banks have purchased more than 1,000 tons of gold, highlighting their sustained interest in gold. Since 2010, they have been annual net buyers, with a total purchase of over 7,800 tons, of which more than a quarter was bought in the last two years. Our surveys of central banks in 2022 and 2023 show that gold's performance during crises and its role as a long-term store of value are key reasons for central banks to hold gold.
It is interesting to note that Klaas Knot, the President of De Nederlandsche Bank, stated in an episode of Buitenhof (see 23:13-23:30) on October 30, 2022: “The balance of De Nederlandsche Bank is solid; we also have a gold reserve... which we certainly will not sell.” This gold reserve of about 600,000 kg has since increased in value by more than 13%, amounting to an increase of approximately 4 billion euros, representing a significant profit. The Netherlands has had more gold in the past; in the 1990s, it was about 1,700 tons. The sale of a large part of this stock at a 'rock bottom price' is now considered a mistake. It appears that the current government wishes to avoid repeating this error and maintain the gold reserve as a valuable asset.
Jerome Powell, the chairman of the U.S. Federal Reserve, indicated that it is unlikely the central bank will be comfortable enough with inflation developments to lower interest rates before the meeting on March 20th. He made this statement yesterday (January 31st) during a press conference following the Fed meeting, where the central interest rate remained unchanged (5.25%-5.50%). Although Powell previously stated that rate cuts are likely to begin later this year, the stock market fell after his remarks; the S&P 500 ended yesterday 1.6% down. The Fed wants to avoid repeating the mistake made in 2021 and 2022, when high inflation unexpectedly persisted. The next two policy decisions of the Fed are scheduled for March 20th and May 1st, with speculation about possible rate cuts
during these meetings. However, the Fed is waiting for clear signs of a decrease in inflation before taking action. The inflation rate in America (December) was published on January 11th and remains stubborn at 3.4%. We look forward to February 13th, the day when the U.S. will publish the January 2024 inflation rate
. If this figure is lower than 3.4%, the likelihood of a rate cut on March 20th increases, which will excite investors.
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