Gold has had a complete turnaround after reaching highs well above $5,000 an ounce. So, what was going on? One clear indicator is that central banks have cut their gold purchases. Central banks have not been viewed as profit maximizers, but the high prices in the first quarter may have been too much, and they took a step back from the market. The other profit-maximizers may have had the same view, and the result has been an over 25% decline from the highs in just over one quarter. This has occurred with both a Middle East war and continued inflation.
While real-time buying by central banks is hard to obtain, the demand for gold by different agents is still an important way to track gold dynamics.
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