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Thursday, July 29, 2021

Central Banks Gold Rush Continues


FLASH: It looks like the gold-buying spree by central banks during the past 10 yrs will probably continue for a while yet.

In a survey of central banks conducted by the World Gold Council (WGC) and YouGov, 54% of respondents expect global holdings to climb in the next 12 months amid concerns about risks in other reserve assets.

Looking further ahead, 68% see gold’s share of reserves staying the same or rising in 5 years’ time.

Nations have expanded gold holdings by about 14% since Y 2009, with the casche now valued at roughly $1.6-T.

Nations from Russia to China to Poland have added to reserves as economic growth slows, trade and geopolitical tensions rise, and authorities seek to diversify away from USD. Bullion holdings rose by 651.5 tonnes last year, the most since Y 1971.

“This year’s survey signals another healthy year of central bank gold demand,” the WGC said in a report last week. “In the next 12 months, heightened economic risks in reserve currency issuing countries are seen as the main factor driving these purchases, but in the medium term structural changes in the global economy may also play a role.”

While Top buyers like China and Russia have continued purchases so far this year, global reserves saw a small decline in March to May, data compiled by the International Monetary Fund (IMF) show.

The WGC and YouGov received 39 eligible responses from 150 central banks contacted as of mid-June, up from 22 respondents last year.

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