Pronounced gold purchases by several central banks will likely draw a line under gold prices say sources close to European-based wealth management firm, Ovannis Capital.
Following a month in which the Indian, Sri Lankan and Mauritian central banks increased their reserves of gold via the IMFs stockpile, the firm believes that the purchases highlight the fundamental shift in wealth from Western, developed economies to those in the emerging East.
Ovannis Capital is thought to believe, along with many others, that the purchases are indicative of their nations desires to diversify their foreign currency reserves away from the US dollar which is steadily buckling under the weight placed upon it by the demands of large stimulus packages, bank bailouts and the prospect of a $1 trillion reform of the US healthcare system.
In addition, China has been advising its citizens to buy gold and silver as an alternative investment and effectively confirmed that it is a buyer of gold on dips in the price.
Ovannis Capital suggests that this is the closest the worlds third biggest economy has come to saying it is diversifying some of its huge $2.27 trillion foreign currency reserves away from the dollar.
The firm has told clients of the significance of the Indian central banks recent purchase of 200 tons of IMF gold and re-confirmed its faith in the strength of the secular bull market in precious metals.