Gold has been relentlessly surging to new records. So what's behind the recent demand?
For thousands of years, gold was the global medium of exchange and, until 1971, it was the standard upon which the US dollar valued itself until it was finally discarded.
But despite most major developed nations signalling victory over inflation — with interest rate cuts in the UK, Europe, Canada and the first expected this week in the US — the upswing hasn't abated. On top of that, America's huge lift in federal government debt — that's seen its annual interest bill top its defence spending — and the ongoing prospect of endless deficits has undermined its position as the world's reserve currency, prompting other nations to look for alternative sources of foreign reserves.
In the past two years, the PBOC has dramatically increased its gold exposure in its foreign reserves.In addition, India, Poland, Singapore, the Philippines, Turkey, Iraq, Qatar, Libya, Kazakhstan and the Czech Republic all have added to their reserves.
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