Central banks around the world are planning to continue to make strong gold purchases during this year, while in the next five years they expect the share of the US dollar in its foreign exchange reserves, the new survey among global monetary authorities.
Geopolitical tensions, the risk of sanctions and increasingly more pronounced doubts in the dominance of the US dollar have cited central banks to buy gold reserves to a record pace. Gold was recently overlayed and became the second largest spare property in the world, just behind the dollar, reminds FTs Leslie Hook.
The price of gold increased by 30 percent since January, and in the last two years duplicated, thanks to growing global uncertainty and market volatility, which encouraged investor demand for safe haven.
According to the World Gold Council (World Gold Council), a record 95 percent of respondents believe that Central Banks will increase its gold reserves in the next year – the highest levels since the survey was launched in 2018. years.
At the same time, as many as three-quarters of the survey participants expect central banks to reduce the share of dollars in reserves over the next five years. More than 70 central banks participated in the research.
Shaokai Fan from the World Gold Council pointed out: “The sentiment is very strong. Among the central banks grows that many institutions increase their gold reserves, including their own banks.”
More and more countries return gold home – distrust in the US and the UK
Due to the growing geopolitical tensions, some central banks plan to move part of their gold reserves from abroad to domestic vault, investor me. Instead of keeping gold in London and New York, where there are two largest world warehouses, more and more states are decided for repatriation.
Briggers about the possibility of accessing gold reserves in the event of a crisis or seizure due to sanctions contributed to this tendency. Although still modest, the trend of returning gold in the home countries is more and more present.
Thus, last year, India returned more than 100 tons of gold from the Bank of England, while the Central Bank Nigeria withdrew part of its reserves from abroad. About seven percent of respondents announced plans to increase domestic storage – which is the highest level from the beginning of the coronavirus pandemic.
In recent months, insecurity further rehearse unpredictable statements of American officials. So in February, President U.S. Donald Trump questioned whether Gold from the American Treasury of Fort Knox “disappeared”, causing uneasiness in foreign countries stored their reserves there.
By the way, the Federal Backup of New York is in charge of keeping gold on behalf of foreign central banks.
Gold all the more sought in crisis – dollar loses aura safety
The results of the survey show that central banks see gold as a key support in crisis times, due to its status as well-free assets and inflation protection. It is precisely, according to the survey, three main reasons for increased accumulation of gold reserves.
The purchases of gold were accelerated after the Russian invasion of Ukraine in 2022. year, when the United States introduced broad financial sanctions and tried to exclude Moscow from international payment systems. Many central banks from the development market then began to quickly diversify reserves and are moving away from dollars.
An anonymous survey participant pointed out: “The recent development of the Customs questioned the status of the US dollar, while simultaneously strengthened the status of gold. The more and more of the inflation in these challenging times marked by geopolitical and trade tensions.”
However, gold also has its flaws – including high storage costs and logistical challenges when transporting, which makes it more complex to manage compared to other reserve funds.
