Inida Buys 200 Metic Tons of Gold

According to Bloomberg news, “India, the world’s biggest gold consumer, bought 200 metric tons from the International Monetary Fund for $6.7 billion as central banks show increased interest in diversifying their holdings to protect against a slumping dollar.”

India previously held 358 metric tons so this is a huge move into more gold. “The fall in the U.S. dollar seems to be pushing all the central banks to strengthen their portfolio with gold,” said N.R. Bhanumurthy, professor at the National Institute of Public Finance and Policy in New Delhi. “Gold is a safe store of value compared to the U.S. dollar.”

“The most important thing is that people want gold even at these prices,” said Ghee Peh, head of mining research, with UBS AG in Hong Kong. “There’s good support for prices for now.”

This purchase by India accounts for about half of what the IMF intends to sell and according to China and Russia may buy the rest.

“Gold production has been declining for the past seven years, while demand, particularly the investment demand, has been growing steadily,” Way2Wealth’s Reddy said. “Central banks and even ordinary investors want to own more gold."

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