HSBC: Iraqi Gold Purchases Reinforce Gold’s Role As Diversifier

London (Mar 26)  News that the Central Bank of Iraq accumulated 36 metric tons of gold in March “reinforces gold’s rose as a portfolio diversifier,” says HSBC. Iraq’s central bank doubled its gold holdings, and the purchase was the largest monthly gold accumulation for a central bank since the Mexico added 78.5 tons of gold in March 2011, says HSBC. “Central banks, most notably from the emerging markets, have been accumulating bullion since 2010 as a means to diversify away from the USD,” HSBC says. “We expect central banks bullion accumulation to total 400t this year.”

UBS Looks For More Gains In Platinum/Gold Ratio

UBS looks for the platinum/gold ratio to rise as a strike continues against South African platinum producers and supplies tighten. “Platinum inventories, including those in the pipeline, have likely been drawn down by now or at most are dwindling,” UBS says. “We expect that from April, producers will struggle to meet contractual commitments with customers. Considering the severity of the situation, platinum prices seem rather benign at these levels, over $50 off the peak at the beginning of the month.” The platinum/gold ratio, which measures how many ounces of gold it takes to buy an ounce of platinum, is around 1.09, the highest in the last couple of weeks, UBS says. “But at these levels, the ratio is still considerably lower than the 2 ½-year high of 1.18 posted at the beginning of the year,” UBS says. “With gold under pressure right now and the strike in South Africa continuing, the platinum/gold ratio could have scope for further upside in the near-term.”