Gold purchase drops 20 percent www.zgm.mn
Mongolia’s gold purchase has decreased 20 percent compared to the previous year, according to the Bank of Mongolia (BoM). As of June, BoM purchased 7.5 tons of gold, down by 1.8 tons year-on-year. The Central Bank’s fulfillment of gold purchase reached 30 percent in the second quarter of 2019.
The amount of gold traded at the Central Bank totalled 1.5 tons in July, down 649 kilograms per month from a year earlier when the bank bought an average of 2.2 tons per month. In the last month, BoM bought one gram of gold at an average of MNT 120,000. Mongolia planned to allocate MNT 83 billion to the budget from the export of gold this year, estimating the gold price at USD 1252 per ounce. In the first six months of this year, the country exported 4.3 tons of gold, earning USD 195 million.
The gold price has risen 17 percent since the beginning of 2019. The U.SChinese trade war is escalating, slowing the global economy and central banks are softening their monetary policy creating a favorable ground for gold price to increase. According to Gold Sachs, the gold price is expected to reach USD 1,600 in the upcoming months.
In the last year, the BoM has increased its foreign exchange reserves by over USD 700 million. BoM is also planning to buy 22 tons of gold this year. However, achieving the target will be difficult due to some of the reasons and conditions, the Central Bank said. Thus, the Mongolian Parliament has decreased the gold royalty a 5 percent rate in March to recover the BoM’s gold purchases.