Central Bank Gold Agreement To Last Five Years

  • Posted Wednesday, August 20, 2014 at 01:42 PM

Los Angeles CA, August 20 (Tangible Investments) - by James O’Dell - Gold and Silver prices retreated on Tuesday, with Gold easing $2.15 or 0.55 percent to close at $1,295.20 an ounce, after equities and the dollar were boosted by a better than expected U.S. housing report. The price of Silver dipped $0.19 or 0.97 percent to close at $19.45 an ounce, while the Gold/Silver ratio, the measure of the number of Silver ounces needed to buy an ounce of Gold, rose to 66.59.

The rise in permits and housing starts was a "big upside surprise" and it, "adds to evidence that the housing recovery may be picking up a bit of steam again." said CIBC World Markets' Avery Shenfeld.

Meanwhile, central banks continue to build their Gold hoards while the price of the yellow metal is still relatively cheap. Central bank buying has reduced the volatility in the Gold market and in May of this year, the European Central Bank (ECB) as well as several other central banks in Europe inked the fourth Central Bank Gold Agreement (CBGA). The CBGA declares that the signing central banks “currently do not have plans to sell significant amounts of Gold,” and the agreement lasts for five years beginning in September 2014.

Russia continues to lead other central banks in its bullion purchases and has seen a significant increase in its official reserves since February 2014, surpassing both Switzerland and China as it moved into fifth place with 1,094.7 tons.

In August, Russia's central bank doubled down, deciding to buy up even more Gold in its efforts to diversify away from the dollar and the euro following harsh economic sanctions recently imposed by the U.S. and its European allies against Moscow. The United States still owns the largest Gold reserves in the world with 8,133.5 tons, or 71.9 percent of its foreign reserves.

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