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WGC: RBI ranked 6th among central banks in buying gold abroad;China’s central bank tops

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On January 15, 2020 India’s central bank i.e., the Reserve Bank of India (RBI) has been ranked 6th largest buyer of sovereign gold abroad after it purchased 25.2 tonnes in the first 10 months of 2019 according to World Gold Council(WGC) report titled “Outlook 2020: Global economic trends and their impact on gold”. The central banks of China, Russia, Kazakhstan, Turkey and Poland have purchased more gold than India in 2019. The report in detail are as follows:rbiWGC outlook 2020:

Report on RBI:

i.RBI gold purchase: In October 2019, 7.5 tonnes of gold was bought by RBI buttressing (supporting) its foreign exchange reserves(forex) to $450 billion.

  • Forex reserves crosses $450 billion: To be more precise, the Forex reserves surged to a new high of $451.7 billion as of December 3, 2019, which is the largest in recent years.
  • The total reserve rose by $347 million to $448.596 billion in the week to November 22, 2019.

ii.Current holdings in gold: RBI currently holds 625.2 tonnes of gold, that forms 6.6% of its forex reserves. The gold consumption in India slipped in 2019 as against the level in 2018.

iii.Gold trade:  The consumer and gold trade sentiment is expected to soften in India throughout 2020.

  • In the last 6 months, the growth in gold reserves in the form of gold in India, was 27% higher than the overall growth.

iv.Impact by taxes: The report highlights the need for tax cuts to increase economic growth. This was due to the fact that higher taxes exacerbated the impact of record high local consumption on gold price.

General Report:

i.Data generation: The data about the gold holdings of various central banks was collected after those central banks shared their data with the International Monetary Fund (IMF).

ii.Total central banks report: The central banks added 27.9 tonnes of gold on a net basis which when considering year-to-date basis brings net purchase to 570.2 tonnes, 11% higher than in 2018 (515.2tonnes).

iii.Gold selling: In 2019, the countries of Uzbekistan and Venezuela sold 16.6 tonnes and 30.3 tonnes of gold respectively.

iv.Gold buying by investors: The second biggest buyers of gold in 2019 were the institutional investors in exchange traded funds (ETF). Despite high retail demand for jewellery, the ETFs overtook them by buying 400 tonnes in 2019. ETFs will continue to buy gold in 2020 also.

  • Gold price has seen its strongest increase in 10 years.

v.2019 statistics on gold: The performance of gold in market in 2019 was best Since 2010. It rose by 18.4% in United States dollar (USD)terms in 2019.

About World Gold Council(WGC):
Founded- 1987.
Headquarters- London, United Kingdom(UK).
Chief Executive Officer(CEO)- David Tait.
Managing director(MD), India- Somasundaram PR
Chairman- David Harquail.