① According to an annual survey by the World Gold Council (WGC), central banks in more advanced economies plan to increase their gold holdings; ② central banks in more advanced economies also expect that in the next 5 years, the share of gold in global reserves will rise, while the share of the US dollar in global foreign exchange reserves will decline; ③ WGC Global Central Bank heads say that central banks have a stronger convergence of views on gold this year.
Financial Services Association, June 18 (Editor: Zhou Ziyi) According to an annual survey by the World Gold Council (WGC), against the backdrop of continuing macroeconomic and political uncertainty, it is expected that the share of gold held by central banks in advanced economies will rise in the future, while the share of dollar holdings will decline.
According to the survey, the central banks of nearly 60% of wealthy countries believe that the share of gold in global reserves will rise in the next 5 years. This ratio was only 38% last year; about 13% of developed economies plan to increase their gold holdings in the next year. This ratio is higher than about 8% in last year's survey, and it is also the highest level since this annual survey began.
As can be seen, developed country central banks are following the pace of gold purchases in emerging markets. Emerging market central banks have been major buyers of gold since the 2008 global financial crisis.
At the same time, more and more developed economies also believe that the share of the US dollar in global foreign exchange reserves will decline in the next 5 years. This ratio will rise from 46% last year to 56%; among emerging market central banks, 64% hold this view.
High demand for gold
Since this year, while the price of gold has risen sharply, external demand for gold has also increased, highlighting that central banks are seeking to diversify their assets through alternative currencies and assets, while their allocation to the US dollar has been declining.
Central banks hold gold mainly because of its long-term value, excellent performance during the crisis, and its role as an effective diversification tool.
The head of the WGC Global Central Bank said, “We have seen a stronger convergence this year. More developed countries think that gold will take up more of the global reserves, while the dollar will shrink.”
He also added that developed markets are catching up with emerging markets' aggressive allocation of gold.
The survey also found that since the annual survey began 5 years ago, the proportion of global central banks planning to increase their gold reserves in the next 12 months has reached 29%, a record high; of these, nearly 40% of emerging market central banks plan to increase their holdings.
According to WGC data, central banks around the world increased their gold reserves by more than 1,000 tons in both 2022 and 2023.
In stark contrast to gold, IMF research this month shows that the share of the US dollar in global foreign exchange reserves has plummeted from over 70% in 2000 to around 55% last year, excluding the impact of the appreciation of the US dollar.