Central banks switch to hoarding gold

After net-selling an average of 444 tonnes of gold in the five years to 2008, central banks only offloaded a net 44 tonnes last year. In fact, after 62 tonnes of net selling in the first quarter of 2009, central banks posted three quarters of net buying. This shift may signal a fundamental change in sentiment, says the London-based World Gold Council WGC.

In recent years, investors had been focusing on gold supply that may come onto the market from the official sector, says the council in its report for 2009. But several purchases by central banks, as well as reduced supply from signatories to the Central...