Central banks buy gold. Demand will continue to grow
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Demand for gold from central banks will grow. Such a result was given by the traditional annual survey conducted in February-March. 83 central banks of the world took part in it, which together control assets worth $7 trillion. Daniil Hetmantsev, head of the Verkhovna Rada Committee on Finance, Tax and Customs Policy, reported this in Telegram.
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The trend established in 2022, when the volume of gold purchased by central banks increased by 152% and reached 1,136 tons, will continue.
More than two-thirds of respondents believe that the current reserves will increase during 2023.
Main motives
Among the main reasons for increasing the amount of gold in reserves:
- investments in gold are seen as an effective way to protect against inflation (70% of respondents expressed this opinion);
- geopolitical uncertainty, primarily associated with Russia’s war against Ukraine, is intensifying, and there is not enough understanding of what its consequences will be for reserve currencies (more than 40% of respondents gave this argument, compared to only 23% during last year’s survey).
Read also: In Japan, the price of gold again renewed its historical high
About a third of those surveyed said that central banks have changed or will change the structure of assets, including because of the tension in American-Chinese and partly European-Chinese relations.
This especially applies to central banks that keep their reserves not within the country, but abroad, for example, in the Bank of England and the Federal Reserve Bank of New York.
Some of the central banks in those countries that have friendly or close relations with the Russian Federation, help to circumvent sanctions or organize “parallel imports”, are carefully studying the case of freezing the assets of the Central Bank of the Russian Federation in the West as a potential risk in the event of the active introduction of secondary sanctions.
In this sense, the purchased gold, if stored inside the country, can be useful if, for some reason, access to other reserves located outside the country is lost.
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Source: Ministry of Finance
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