Central banks help push up gold prices
Gold bars are displayed at a shop in Tokyo.
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BILL RADKE: We keep telling you on this show, the price of gold has hit yet another record. It's at 1333 an ounce this morning. And one reason? The World Gold Council said yesterday that, for the first time in decades, central banks -- the Federal Reserves of the world -- are buying more of the metal overall than they're selling.
Here's Marketplace's Amy Scott to explain.
AMY SCOTT: To understand why central banks have switched from sellers of gold to buyers, it helps to know why they'd been selling it in the first place.
Jeffrey Christian follows the market at CPM Group. He says it all goes back to about four decades ago when the world's financial powers moved away from gold as the international currency standard.
JEFFREY CHRISTIAN: All of a sudden central banks that had used gold for a couple centuries in settling international trade no longer needed that gold for that purpose.
By now, Christian says, central banks in Europe, the U.S. and Japan have sold most of the gold they wanted to. And other countries that had been stockpiling dollars and euros are now buying gold.
CHRISTIAN: They've been saying we need to diversity some of our monetary reserves away from paper currencies into gold.
Christian says central banks are the second-biggest factor in the recent price run-up.
The first is all the investors clamoring for a safe haven amid the turmoil of the last decade.
I'm Amy Scott for Marketplace.