Investments in gold have increased over the past year, driven by central bank purchases, with overall implied allocations by non-bank investors at the highest since late 2012, said analysts at JPMorgan Chase & Co., whose Nikolaos Panigirtzoglou, in a note.
- The implied allocation to gold has increased since the pandemic and appears quite high by historical standards.
- “One must assume a structural increase in central bank demand beyond historical norms (due to sanctions fears or general diversification away from G7 government bonds) to be optimistic about gold. »
- But this is currently in question as there is evidence of a normalization of gold purchases by central banks in the second quarter of 2023 and it remains to be seen whether this is temporary or not.
- There is no doubt that the pace of central bank purchases is now the most important factor in assessing the future trajectory of gold prices.
- It takes over from ETF flows, which were the largest before the pandemic.
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