With little further to fall, a soon-to-recover U.S. dollar may signify the end of gold’s “safe-haven” pricing and purchasing by the world’s central banks, according to Commodity Strategist David Thurtell, a director at Citigroup Global Markets (London). “A lot of the positives that have driven the gold price higher over the last decade really have waned or are starting to wane seriously,” said Thurtell, explaining ETFs have already seen the bulk of their gains and that only a small sliver of the gold hedge book - 250 tons - is left to buy back. “If anything, with credit harder to come by, small, high-cost gold miners might be inclined to put gold hedges back on, particularly now that gold prices are so high in historical terms.” Along the same lines, Thurtell predicts China and Japan will not follow the Western central banks’ practice of purchasing massive amounts of gold, especially now that the price of gold has reached a historical high. “The accumulation of gold reserves by Western central banks was really a byproduct of an exchange rate system which no longer exists. And there is no real reason why China and Japan would want to rush out and buy massive amounts of gold to mimic other central banks when the price is at a record level,” Thurtell said. “It may make sense to accumulate a couple of billion dollars’ worth of gold for a rainy day, or a couple of million barrels of oil, or a couple of million tons of copper…But if I was sitting in a central bank FX investment division, I wouldn’t be recommending buying gold at the all-time high.”

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