It looks like the gold-buying spree by European Union central banks in the past decade will continue for a while yet.
That’s why signatories of the fourth Central Bank Gold Agreement – including the Central Bank of Cyprus – no longer see the need for the formal agreement as the market has developed and matured.
The European Central Bank and the 21 other central banks that are signatories of the CBGA have decided not to renew the Agreement upon its expiry in September 2019.
The first CBGA was signed in 1999 to coordinate the planned gold sales by the various central banks. When it was introduced, the Agreement contributed to balanced conditions in the gold market by providing transparency regarding the intentions of the signatories.
It was renewed three times in 2004, 2009 and 2014, gradually moving towards less stringent terms.
CBC had a total of €516 million worth of gold in its balance sheet by end of April 2019, according to latest data.
With the increase in the price of gold in 2018, CBC’s unrealized profit amounted to €17.3 million. The total amount of gold under its ownership is approximately 446,000 ounces.
Since 1999 the global gold market has developed considerably in terms of maturity, liquidity and investor base. The gold price has increased around five-fold over the same period.