About 13% of Advanced Economies Plan to Increase Gold Holdings
Advanced economies’ central banks expect gold’s share of global reserves to rise at the expense of the US dollar while looking to follow the lead of emerging markets in buying bullion. Almost 60% of rich countries’ central banks predict that gold’s share of global reserves will increase in the next five years, up from 38% of respondents last year. According to the 2024 Central Bank Gold Reserves (CBGR) survey, conducted between 19 February and 30 April 2024 with 70 responses, 29% of central banks’ respondents intend to increase their gold reserves in the next twelve months, the highest level observed since the survey began in 2018.
Rise in Gold Holdings Among Advanced Economies
According to the survey, about 13% of advanced economies plan to increase their gold holdings in the next year, up from around 8% last year, marking the highest level since the survey’s inception. This trend follows the lead of emerging market central banks, which have been significant purchasers of gold since the 2008 global financial crisis.
Shift Away from US Dollar
Furthermore, a rising proportion of advanced economies – 56%, up from 46% last year – believe that the dollar’s share of global reserves will decrease over the next five years. Among emerging market central banks, 64% share this view. This shift reflects a broader diversification strategy by central banks, especially after the US weaponized its currency in sanctions against Russia.
Increase in Gold Reserves
The survey found that a record number of central banks intend to increase their gold reserves over the next 12 months, with 29% of respondents planning to do so. Additionally, nearly 40% of emerging market central banks aim to raise their holdings. The main reasons cited by central banks for holding gold are its long-term value, performance during crises, and its role as an effective diversifier.
Impact on Global Reserves
The consecutive years of record buying gold by central banks have influenced the metal’s price, reaching nearly $2,450 per troy ounce last month. This surge in gold’s value has been driven by a decline in the dollar’s share of global foreign exchange reserves, indicating a broader shift in reserve management strategies.
Considerations for Reserve Currencies
While the Chinese renminbi has made gains as a reserve currency, uncertainties surrounding the country’s economy have led to a decrease in the percentage of central banks expecting it to increase its share of global reserves. This reflects the complex dynamics shaping global reserve currency preferences.
