Why are central banks giving a cold shoulder to gold in 2016?

Since 2010 central banks have become major buyers of gold, accounting on average for about 10% of total gold demand over the past five years. However, demand from the official sector has been lacklustre so far in 2016, prompting some commentators to wonder whether central banks will become net sellers of gold in the future. We remain of the view that temporary factors have been responsible for the recent weakness in demand and that this will not be sustained.