Bangladesh makes its play in the international gold game(Read article summary)
Gold's price has risen lately, and more countries are buying it from IMF. What does this mean for the American economy?
Toru Hanai / Reuters / File
It’s a relatively small gold purchase, amounting to only 0.3 percent of last year’s 4,000 tonnes of demand, but Bangladesh Bank, the nation’s central bank, has stepped up to the yellow-metal plate with a roughly $400 million, 10-tonne purchase of gold from the International Monetary Fund (IMF).
According to the Financial Times:
“The shift in central banks’ attitudes towards gold is important on two fronts: the fresh interest provides psychological support and, more importantly, slower sales reduce sources of supply and help to boost prices. GFMS, the London-based precious metal consultancy, estimates central banks last year sold 41 tonnes of gold, down 82 per cent from 2008 and the lowest level in 20 years.
“The IMF said on Thursday it sold gold to Bangladesh Bank, the country’s central bank, at market prevailing prices on September 7. Gold was quoted on the afternoon fix in London, the market benchmark, at $1,256.75 a troy ounce that day.
“Gold prices hit a nominal all-time high of $1,264.90 an ounce in mid-June. However, in real terms, adjusted for inflation, the precious metal is still well below its record of more than $2,000 set in the early 1980s. In early trading in London on Friday, gold hovered just below $1,250 an ounce.”
This most recent gold purchase is a part of the 403.3 metric tons the IMF began shopping around in September 2009. Previous buyers included the Reserve Bank of India, Bank of Mauritius, and the Central Bank of Sri Lanka, which together scooped up about 212 metric tons. The IMF sold another 83.3 tonnes on-market, which leaves it with roughly 93 tonnes still left to sell. Asian central banks continue to increase their gold holdings, a tangible sign of the growing wealth and influence of the region. You can visit Bloomberg to read more details about how Bangladesh’s central bank has boosted its gold reserves.
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