Central Banks

Gold fell 2% in October on rising bond yields and dollar strength, but it was positively impacted by higher breakeven inflation. But a weaker US dollar vs. euro and lower ETF outflows provided some support

The diversity of monetary gold accounting practices prompted the World Gold Council to undertake a study of central bank monetary gold accounting practices, first published in 2016 and updated in 2022 as Central bank accounting practices for monetary gold – 2022 update. The update adds central banks covered, better aligns practices with accounting frameworks, and expands the number of gold accounting issues covered.

To better understand how investors are navigating this complex landscape, we partnered with Coalition Greenwich. They interviewed over 400 key decision makers at global investment institutions on their portfolio allocations and views on markets and gold.

Gold fell 3.5% in July, leaving it down 2.9% on the year at US$1,753/oz. A strong US dollar and sticky real yields weighed on gold in the first half of July.

Investors face a challenging environment during the second half of 2022, needing to navigate rising interest rates, high inflation and resurfacing geopolitical risks. In the near term, gold will likely remain reactive to real rates, which in turn will respond to the speed at which global central banks tighten monetary policy and their effectiveness in controlling inflation.

In 2021, the 56% y-o-y rise in China’s gold consumption marked a strong comeback from 2020.