Central banks are displaying an unprecedented interest in gold, as revealed by the World Gold Council’s (WGC) latest annual survey. This year’s survey saw a record-high response rate, with 73 central banks participating – almost half of the world’s central banks.
Shaokai Fan, WGC’s Managing Director for Central Banks and Public Policy, remarked that this reflects a growing interest in gold’s role in foreign exchange reserves. “It’s not just the number; the high level of participation also demonstrates a strategic commitment to gold,” Fan emphasized.
According to the survey results, 95% of respondents anticipate an increase in global gold reserves over the next year. Notably, 43% of central banks plan to increase their official gold reserves this year – a significant rise from last year’s 29%.
This positive trend follows a three-year buying spree of over 3,000 tons of gold by central banks globally. Analysts predict this figure could rise by another 1,000 tons this year, mainly driven by emerging economies seeking to bolster the safety of their currencies amid geopolitical uncertainties.
Another notable trend is the diversification away from the US dollar. While the greenback remains the primary reserve currency, 73% of survey participants believe its dominance will significantly decline in the next five years. In contrast, 76% foresee a larger allocation to gold in their portfolios, up from 69% last year.
The European Central Bank’s recent report also revealed that gold has surpassed the euro as the second-largest reserve asset in international reserves.
When asked about the reasons for holding gold, 85% of central banks cited gold’s effectiveness during crises, 81% emphasized portfolio diversification, and 80% viewed gold as a long-term store of value. WGC concluded: “The stability of these top three factors reflects a global consensus on the strategic role of gold in reserve risk management.”
With inflation concerns and trade risks persisting, especially for developing economies, gold is becoming a safe haven and a pillar in central banks’ long-term reserve strategies.
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