From WikiFX news. As the world‘s top gold buyer, Central Bank of
Russia’s decision to stop gold purchase starting from April may signal
an upcoming big decline in global central banks net gold-purchase.To get
more news about
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The reason for gold prices plummet is that facing market liquidity
drain, investors thus sell off gold for dollars in order to pay margin
calls. From our observation, the foreign exchange reserves of global
central banks are shrinking rapidly, and a bullish trend of the USDX
recently indicates there may be another round of dollar shortage in the
market.
Given that many central banks have cut their holdings of US Treasury
Bonds and the Fed may reduce quantitative easing scale, it seems that
global central banks have few options to acquire dollar liquidity other
than selling off gold reserves. As most central banks are currently
focused on reviving domestic economy, this only increases their demand
for dollar. Central banks in countries such as Sri Lanka, Germany and
Tajikistan have begun selling their gold reserves.
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