World gold prices faced a lot of pressure last week as tensions in the Middle East caused energy prices to fluctuate sharply, increasing concerns about inflation and monetary policy prospects. However, gold buying demand from central banks remained positive, continuing to become an important support for the market.
According to the Precious Appraisal report released on July 13 by Heraeus Precious Metals, gold prices were under pressure last week after tensions in the Gulf region increased, while central banks continued to net buy gold despite the precious metal price adjustment.
Heraeus Group said that the memorandum of understanding (MoU) signed on June 17 between the US, Iran and Gulf countries once created expectations for a cooldown process in the region. However, the situation changed from July 6 after attacks targeting commercial ships and subsequent military responses, increasing concerns about the energy market.
After new developments, gold prices fell below 4,100 USD/ounce, while silver prices fell below 60 USD/ounce. At the same time, Brent oil prices exceeded 80 USD/barrel and WTI oil exceeded 75 USD/barrel, raising concerns that inflationary pressure could increase and affect monetary policy prospects. However, as oil prices cooled down in subsequent sessions, precious metal prices also gradually recovered.
Despite market fluctuations, central banks continue to increase gold reserves. Citing data from the World Gold Council (WGC), Heraeus said that central banks net bought 41 tons of gold in May, with most of the purchases coming from Europe and Asia.
Poland and China are the two countries that bought the most in the month, adding 18 tons and 10 tons of gold respectively. After this purchase, the gold reserves of the State Bank of Poland increased to 614 tons, surpassing the Netherlands to become the 10th largest gold reserve holder in the world and only about 86 tons away from the target of 700 tons.
In addition, Uzbekistan and Kazakhstan also continued to increase gold reserves, buying 9 tons and 7 tons in May respectively. According to Heraeus, most of this gold was purchased from domestic mining sources.
Notably, the People's Bank of China (PBoC) continued to buy 15 tons of gold in June. This is the largest purchase since October 2023 and also the 20th consecutive month China has increased its gold reserves. After the new purchase, China's gold reserves reached 2,346 tons, equivalent to about 9% of the total value of national reserves.
Heraeus believes that the fact that central banks continue to buy gold in the context of price adjustments shows that the demand for accumulating reserves is still maintained, despite short-term market fluctuations.
