Ongoing support from central banks will ensure the rise of regulator-backed digital currencies won’t dull demand for gold - at least in the immediate term, according to Daniel Hynes, Senior Commodities Economist at ANZ.
Recent expert commentary in the space has suggested a shift to the use of digital currencies by central banks – including China’s own Digital Currency Electronic Payment – could lesson demand for gold as a reserve, impacting the broader market.
Speaking at ANZ’s annual gold dinner from Perth in November, Hynes said that while the situation would likely evolve in the long term, re-energised activity from central banks as the post-COVID recovery kicks into gear would ensure immediate demand.
“It does present a long-term issue for gold as a reserve base, and we'll have to watch that closely,” Hynes told the event. “But I think for the moment, the huge level of backing [for] this physical commodity will hold it in good stead as a reserve base.”
“Certainly China has indicated they're looking to [pursue a digital-currency strategy]. But that might be more around removing themselves from their link with the US dollar, and to be leaders in the in the FX market.”
Hynes made the comments at the event in a conversation with Nick Frappell, Global General Manager at ABC Bullion, and Luke Collins, Head of Commodity Sales, Australia at ANZ. You can listen to an edited version of the conversation on podcast below.