Central-bank demand also is helping to compensate for the sales from ETPs. Nations added 534.6 tons to reserves last year, the most since 1964, and may buy another 350 tons this year, the gold council estimates. Official reserves total 31,910 tons, 16 times more than metal held in ETPs.
“The arguments for holding gold are in the balance,” said Jeremy Baker, a senior commodities strategist who helps oversee about $700 million of assets at Harcourt Investment Consulting AG in Zurich. “The physical market is definitely helping and providing a boost and will go a long way to stabilizing prices, but for a longer-term rally we need to see ETF declines turning around and I don’t see that happening anytime soon.”