Banks rush to buy it. Get ready!

Al-Qabas writes under the headline "Why are central banks eager to buy gold?"

The price of gold could reach a record $ 2,000 an ounce over the next two years, as US economic growth fades and the Fed has lowered commodity prices. interest, announced the Financial Times.

Last year, global central banks bought gold at their highest value in the last 50 years. The Russian central bank, which holds about $ 100 billion worth of precious metals, aims to reduce the impact of the dollar.

The precious metal could reach levels of eight years ago, when gold reached $ 1,900 an ounce, the uncertainty surrounding the 2020 presidential election associated with an economy unstable local, said Citigroup, based in New York, in a research note. .

Negative interest rates around the world have prompted investors to rediscover non-interest bearing assets such as gold. According to the newspaper, the volume of negative interest bonds in circulation is currently about $ 15.3 trillion. On the other hand, the price of gold has risen by 17% this year to reach 1495 dollars an ounce, thus allowing the precious metal to know the best year since 2010.

Gold prices reached historic highs in 2010, when they broke the $ 1,900 mark. This year, prices have risen sharply under the pressure of overabundant markets. global markets, escalating trade wars and bond price issues in developed markets.

The rise in gold prices has led to growth in the foreign reserves of several central banks around the world, including the Central Bank of Egypt, and these banks are actively increasing their reserves of gold. precious metals in order to avoid the problems of currency reserves.

A combination of low interest rates, increased risks of global recession and strong central bank demand could drive up prices, Citi said. According to the World Gold Council, gold purchases by the central bank have reached their highest level in nine years.

According to Citigroup, spot gold prices are expected to trade longer and reach new heights over the next two years. Countries with large foreign exchange reserves, such as China, which has $ 3.1 billion in reserves, are eager to diversify their portfolios to reduce their exposure to the US dollar.

In the past nine months, the Chinese central bank has purchased for 4.8 billion dollars of gold. "It seems that the position of gold on the portfolio has returned to its business," said Suki Cooper, an analyst at Standard Chartered in New York. The People's Bank of China raised its gold holdings to 62.45 million ounces in August from 59.24 million in November, bringing the total gold holdings of the bank to about $ 94 billion in current prices. Alistair Hewitt, director of the World Gold Council, said central banks in all emerging markets were attracted by the liquidity of the gold market and its lack of virtual risk. He said countries such as Russia had adopted a clear policy of "de-dollarization". China is the largest producer and consumer of gold in the world, but precious metals account for only 2.7% of its official reserves, worth more than $ 3 trillion. "China's foreign exchange reserves are very large and diversification will take decades and decades," said Bernard Daha, a commodity analyst at Natixis. The components of China's foreign exchange reserve are a state secret, but officials have already indicated that it was a combination of currencies broadly consistent with the composition of the reserves as reflected in IMF data collected from Member States. The US dollar represents 64% of global reserve assets in 2016, according to the latest data available.