The Russian central bank is on a gold buying spree amid bullish projection by German universal bank Commerzbank for the precious metal.
Data indicates that the bank accumulated an additional 3.1 tons (100,000 ounces) of gold in September after adding a similar amount in July, RT reports.
The accumulation is the first since April 2020. As of October 1st, 2021, the bank had 73.9 million ounces (2,298.547 tons). The September addition means that the country’s foreign exchange reserves accounted for 20.95%.
Notably, Russia’s international reserve entails highly liquid foreign assets, including stocks of monetary gold, foreign currencies, and Special Drawing Rights assets.
Russia’s gold holdings have stood out, considering in 2020, the reserves grew by $40 billion, ignoring the economic impact of the coronavirus pandemic.
As of June 2019, the institution set a target of $500 billion and has sustained the threshold ever since. At the start of September, the country ranked fifth in foreign currency reserves at over $618 billion.
In recent months, gold has been at the center of the financial world, with analysts keen on the price movement that has appeared to stagnate mainly in 2021. Notably, the precious metal has been put to the test over its hedge against inflation.
The impact on the prices is highlighted by our recent report that showed that the top seven gold ETFs in the U.S. by the highest average daily trading volume have returned an average negative -7.41% on a year-to-date basis as of October 18.
Commerzbank bullish on gold
Despite the struggling prices, Commerzbank’s technical team projects bullishness for the precious metal. The bank places the gold resistance level at $1,794, which has been high since July. The analysts note that if gold breaks the level, it will embark on a rally towards $1834.16.
Commerzbank states that gold is still recovering from the 78.6% retracement at $1,722, and the surge is yet to clear moving average resistance at $1,794.
According to the analysts, the bank remains neutral, and it will generate interest when the price closes above the 1845 2020-2021 resistance line. On the flip side, the institution places the downside trend below $1721, finding the support at 1679.80 or 1677.83.
The bullish projection is highlighted by activities in leading markets. As we previously reported, demand for gold in China is rebounding after the gold market was negatively impacted by the economic impact of the coronavirus pandemic.
Furthermore, demand for gold exchange-traded funds (ETFs) in India in September reportedly attracted Rs 446 crore (or about $59.43 million). The amount exceeded the inflow of Rs 24 crore (or $3.19 million) recorded in August.