Central banks seen buying up more gold in next 12 months – World Gold Council

Gold futures rose Tuesday, as softer than forecast U.S. retail sales data added to sentiment that the Federal Reserve will reduce interest rates this year, sending the dollar and Treasury yields lower.

Sales rose by a weaker than expected 0.1% last month, which market participants view as boosting the likelihood of a Federal Reserve interest rate cut sooner rather than later, a tailwind for non-interest bearing bullion.

Traders are currently pricing in a 67% chance of a Fed rate cut in September, according to the CME FedWatch Tool.

Front-month Comex gold (XAUUSD:CUR) for June delivery closed +0.8% to $2,330.40/oz, while front-month June silver (XAGUSD:CUR) settled +0.6% to 29.505/oz.

ETFs: (NYSEARCA:GLD), (NYSEARCA:GDX), (GDXJ), (IAU), (NUGT), (PHYS), (GLDM), (AAAU), (SGOL), (BAR), (OUNZ), (SLV), (PSLV), (SIVR), (SIL), (SILJ)

Despite last month’s pause on gold purchase by the Peoples Bank of China, the world’s central banks continue to have a growing appetite for gold, according to data from the World Gold Council, whose latest survey showed 29% of central bank respondents anticipate adding more gold to their reserves in the next 12 months.

More than four in five respondents expect reserve managers will boost global holdings of bullion, the highest confidence level on record for the survey, the WGC said.

Banks in emerging markets maintained their usual positive outlook on gold’s future in reserves portfolios, but were now joined in this view by 57% of advanced economy central banks, up from 38% in 2023.

“Planned purchases are chiefly motivated by a desire to rebalance to a more preferred strategic level of gold holdings, domestic gold production, and financial market concerns including higher crisis risks and rising inflation,” the WGC said.