The purchasereported in the International Monetary Fund’s statistics on international reservesfollows a shift in the gold market to net central bank buying, following years of official sector sales, and should be welcomed as a positive boost for the yellow metal, said Jonathan Spall, Director of Commodities Distribution at Barclays Capital.
According to the data, the central bank of Mexico bought 93.3 tons of bullion over the two-month period, vastly increasing its total reserves, which stood at just 6.9 tons in January.
Prior to this, they held very little metal, so it is a decent size change, Spall said. People are going to view this as bullish and will now be closely watching other countries in the region and elsewhere for further changes.
In a statement late Wednesday, the Bank of Mexico said the gold holdings represent about 4% of Mexicos international reserves and the purchases are part of the banks policy regarding investments and diversification of assets.
May IMF data also show continued buying by Russia and Thailand, of 18.8 tons and 9.3 tons, respectively.
After being a net seller for around two decades, the sector then shifted to being a considerable buyer last year, according to the World Gold Council.
Mexico seems to be following the trend established by several other central banks recently and is moving toward restoring a prior balance between gold and currency reserves, said George Milling-Stanley, managing director of government affairs at the WGC.
Source: The Wall Street Journal
