El Salvador lawmakers overturn national mining ban
The legislation will grant the Salvadoran government sole authority over mining activities within the country's land and maritime territory.
Central banks became gold sellers for the first time since 2010 as some producing nations exploited near-record prices to soften the blow from the coronavirus pandemic.
Net sales totaled 12.1 tons of bullion in the third quarter, compared with purchases of 141.9 tons a year earlier, according to a report by the World Gold Council. Selling was driven by Uzbekistan and Turkey, while Russia’s central bank posted its first quarterly sale in 13 years, the WGC said.
While inflows into exchange-traded funds have driven gold’s advance in 2020, buying by central banks has helped underpin bullion in recent years. Citigroup Inc. last month predicted that central bank demand would rebound in 2021, after slowing this year from near-record purchases in both 2018 and 2019.
“It’s not surprising that in the circumstances banks might look to their gold reserves,” said Louise Street, lead analyst at the WGC. “Virtually all of the selling is from banks who buy from domestic sources taking advantage of the high gold price at a time when they are fiscally stretched.”
The central banks of Turkey and Uzbekistan sold 22.3 tons and 34.9 tons of gold, respectively, in the third quarter, the WGC said. Uzbekistan has been diversifying international reserves away from gold as the central Asian nation unwinds decades of isolation.
Gold rallied to a record above $2,075 an ounce in August, before declining to trade around $1,900 in recent weeks. Overall bullion demand fell 19% year-on-year to the lowest since 2009 in the latest quarter, the WGC said, largely thanks to continued weakness in jewelry buying. Indian jewelry demand fell by half, while Chinese jewelry consumption was also down.
The fall off in jewelry was partially offset by 21% jump in demand from investors, according to the WGC, which draws data from both the International Monetary Fund and Metals Focus. Gold bars and coins made up most of the increase, as flows into exchange-traded funds slowed from preceding quarters.
Total supply of gold declined 3% year-on-year as mine production remained depressed, even after Covid-19 restrictions were lifted in producers like South Africa. A quarterly uptick in recycling softened the decline, with consumers cashing in on high prices.
(By Eddie Spence)
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