Central Banks Increasing Holdings in Gold
The World Gold Council surveys central banks each year on attitudes around gold and currency reserves. This year, 29% said they plan to increase holdings in the year ahead. That’s the highest since the survey began in 2018.
I think that’s even better than it looks because gold prices appreciated in the past year by almost 20%. That means that gold values as a portion of reserves have risen; which would normally mean less buying. Instead, they’re planning to increase holdings.
The survey also showed that managers expect rising portions of gold reserves in the coming years and lower holdings of US dollars.
Implications for Gold Prices
With central banks expressing their intention to increase their gold holdings, this signals a strong demand for the precious metal. This could potentially have a positive impact on gold prices in the future, as increased demand typically drives prices higher.
With that, gold prices bumped $11 higher today to $2329 in a reversal of yesterday’s loss.
gold daily
Additional Insight: The fact that central banks are expecting to increase their gold holdings while also anticipating lower holdings of US dollars suggests a shift in confidence towards gold as a safe-haven asset. This shift may be driven by global economic uncertainties, inflation concerns, and a desire to diversify reserves in response to geopolitical tensions. As a result, gold could continue to be viewed as a valuable asset for central banks looking to protect the value of their reserves in the face of market volatility.
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