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Central banks hope to continue buying more gold this year, and anticipate that their US dollar holdings will fall in the next five years, according to a survey of global monetary authorities.
Geopolitical concerns, the risk of sanctions and concerns about the state of the US dollar have led global central banks to make drop -up purchases. Gold recently beat the euro to become the second largest reserve asset in the world, behind the US dollar.
Gold prices have increased by 30 percent since January and doubled in the last two years, since global uncertainty and market volatility have promoted investors’ demand.
A record of 95 percent of respondents in a Gold World Council survey expects the gold holdings of global central banks to increase in the next 12 months, the highest level since the annual survey began in 2018.
Meanwhile, three quarters of respondents hope that US dollars of central banks decrease in the next five years. More than 70 central banks responded to the industry agency survey.
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The WGC Shaokai fan said: “The feeling is very strong, there is certainly more confidence among the central banks than the entire universe of the central banks will buy and that its own central bank could buy.”
However, in a sign of how geopolitical tensions are affecting the world of gold, some central banks plan to store more nationwide bullion, unlike London and New York, which are the two largest repositories in the world.
Concerns about the ability of central banks to access gold stored abroad in case of a crisis, or in case of sanctions, have contributed to a tendency of small but not insignificant repatriation, with more gold storage at the national level.
Last year, India repatriated more than 100 tons of gold from the Bank of England, while the Central Bank of Nigeria also repatriated some of its holdings.
About seven percent of respondents said they planned to increase domestic storage, the highest level from the COVID-19 pandemic.
In recent months, the erratic comments of the United States government have contributed to the concern among some foreign countries about whether their gold stored in the United States is safe from political interference.
The New York Federal Reserve Bank manages gold stored in the United States on behalf of foreign central banks.
In February, the president of the United States, Donald Trump, publicly consulted whether gold could have disappeared from Fort Knox, which contains most of the gold reserves of the United States.
In the WGC survey, the central banks said that gold performance during “crisis times”, their lack of risk of non -compliance and their role as inflation coverage were the main reasons for having linges.
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The purchase of gold from the central banks accelerated in 2022, after the Russian invasion of Ukraine, and the subsequent efforts of the United States to freeze Moscow of the international payment system. That led many central banks of emerging markets to start diversifying faster in the US dollar.
“The recent market developments around rates have asked questions about the state of US dollars, but they have reinforced gold,” said an anonymous survey of the survey. “Reserve managers see gold as inflation coverage. At this time challenging marked by geopolitical and commercial conflicts.”
Gold also has disadvantages such as a reserve asset, including storage costs and the disadvantage of transporting it.
