Regarding the reason for gold selling, Bloomberg indicated that some countries have taken advantage of high record precious metal prices to ease the impact of the coronavirus pandemic.
Data from the markets showed that net sales in Q3 of 2020 amounted to about 21.1 tons of the yellow metal, and for comparison, the world’s central banks bought 141.9 tons of gold in the same period a year ago.
According to a report issued by the World Gold Council, Uzbekistan and Turkey led the current wave of selling. The Russian Central Bank also announced that it would sell gold in the third quarter for the first time in 13 years.
The data indicated that the both the central banks of Turkey and Uzbekistan sold 22.3 tons and 34.9 tons of gold, respectively, in Q3 of 2020.
The corona crisis pushed gold prices higher in 2020, while the wave of buying by central banks in previous years helped gold to rise.
Meantime, Citigroup expects a rebound in central banks’ demand for gold in 2021 after a slowdown this year from near-record purchases in 2018 and 2019.
The overall supply of gold fell 3% year-on-year as mine production remained low, even after the COVID-19 restrictions were lifted in producers like South Africa. The quarterly increase in recycling tempered the decline, as consumers took advantage of higher prices.
Gold prices fell $20 an ounce to $1870.78 on Thursday, $10 down from its lowest level since a new all-time high in August, as new US data beat analysts in expectations.
Analysts said that selling gold by central banks could crush the rate in the long run.