Poland’s Gold Purchase May Indicate a New Trend

Against the backdrop of expanding negative bound yield,gold may gain greater appeal among central banks worldwide in 2020 as a unique type of asset. Many see it as an “anchor”that retains its value in a time of growing financial uncertainties. Jens Weidmann, Deutsche Bundesbanks president called gold a cornerstone that supports the stability of the international monetary system in his recent remarks.

A report from the Dutch Bank last October suggested gold boosts people‘s confidence in the central bank’s balance sheet and offers a sense of security. The conclusion seems to be well-grounded.In 2018, Poland became the first European country to purchase gold in the past 2 decades, and the National Bank of Poland(NBP) has carried on the trend this year by purchasing over 100 tonnes of gold.

Polands gold purchase may start a new trend in Europe. Some countries have been struggling under already negative interest rates. Steady demand from central banks is only part of the factor that can push up gold price which, although lingering between support of 1450 and resistance of 1500, has greater potential to rise next year.

The gloomy outlook that US economy may again face recession may trigger a gold surge next year, as the US Federal Reserve may be forced to cut interest rate further in face of a new recession, thus weakening the dollar and drive up gold price.