Gold trade: Banks smarter than you think
“What is important though is that the central banks are highly price sensitive and do not chase the market. They reduce their purchases when the gold price rise and, conversely, increase their holdings when the gold price falls. The result is that they effectively create a floor for the gold price as they act as buyer of last resort.”
USAGOLD note: DeClerk backs up that premise with a simple but effective chart that shows central banks demand increasing on dips in the gold price.