Central Bank Reserves – Euro dull but Gold shines

In a previous article we mentioned the Euro has fallen from the favour of Central Banks as reserve.

In the latest data published by World Gold Council (WGC) shows that gold is being favoured by the central banks globally especially Russia.

Gold is currently trading at $1221/troy ounce and fallen from the recent high just above $1300/troy ounce made on 22^nd of January 2015. Despite the strong dollar gold has bounced off sharply from its lows made sub $1150 level.

We favour the gold price to be on the positive side over the medium term. The reasons being-

• Uncertainty over the political and economic outlook will keep the gold favoured along with the dollar.  

• According to the data from WGC, Central banks have bought record 477 tons, 2^nd only to 2012. 

• Net demand from Jewellery has bounced back sharply from 2009 low, as the demand remain robust from China & India. Demand remained relatively stable despite the government's effort to curb the demand for yellow metal in India.   

We expect the price to take hold around $1200 with the support from rising trend channel.