Central banks have been strong net buyers of gold over the past year, with their net purchases averaging up to 20% of total annual gold supply.
The week ahead
The key theme this week will likely be further easing by central banks, with the ECB expected to cut rates by at least 25 basis points at its Thursday meeting and the BOE expected to announce an increase to its asset purchasing program on the same day.
But perhaps the most important event during the week is the release of US nonfarm payrolls on Friday.
Ben Bernanke has indicated that average monthly increases of 150K are necessary for the Fed’s 8-8.2% unemployment target to be met.
After two consecutive months of sub-100K numbers, another weak number would increase the odds of another round of Quantitative Easing later this year. This would likely be bullish gold and other precious metals.
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