Central banks have just signed a new Central Bank Gold Sales Agreement that reduces the quota of gold bullion they can sell each year by 20%, down to 400 tonnes. However in the last 5 years central banks gold sales had only reached about 75% of the previous agreements limit anyway.
It seems that Central banks are becoming more and more reluctant to part with their gold bullion holdings and some like China as per our recent report are actually more likely to be adding to their reserves in the future. We think it is worth taking note of the fact that Central Banks would prefer to have more bullion on hand compared to other paper based currencies. The full Reuters article apptly titled “The investment case for Gold” is here.