The World Gold Council (WGC) released the central bank gold reserve survey for 2024 on Tuesday, June 18, showing that central banks in various countries added 1,037 tons of gold in 2023. The surveyed central banks believe that the key reason for the decision to increase holdings is that gold has no default risk. The survey also pointed out that many central banks believe that the global reserve status of the US dollar will continue to weaken.
Managing gold reserves is more important than ever in an increasingly complex geopolitical and financial environment. After reaching a historic high of 1,082 tons in 2022, central banks in various countries added 1,037 tons of gold in 2023, the second highest annual purchase volume in history.
Following these record-breaking figures, gold continues to be viewed as a reserve asset for central banks around the world. According to the Central Bank Gold Reserves (CBGR) survey for 2024, conducted from February 19 to April 30, 70 responses were received, and 29% of the surveyed central banks plan to increase their gold reserves in the next 12 months.
"This is the highest level we have observed since we began this survey in 2018. The main motivation for planned purchases is the desire to rebalance the amount of gold held and domestic gold production to a more strategic level, as well as concerns over the financial markets, including higher crisis risks and inflation, "the World Gold Council wrote.
The survey shows that 81% of respondents expect to increase their holdings of US Treasury bonds in the next 12 months, up significantly from 71% last year.
As the role of the US as the world's reserve currency continues to weaken, central banks around the world see significant changes in the global financial market, leading to an increasing number of people choosing to invest in gold.
Regarding the role of the US dollar as the world's reserve currency, 62% of respondents stated that they believe the dollar's share will decline in five years, up from 55% in 2023 and 42% in 2022.
(Source: WGC)
(Source: WGC) The World Gold Council pointed out that there is a significant difference in sentiment between central banks in emerging market and developing economies (EMDE) and those in developed countries. Central banks of emerging market countries generally believe that the role of gold as a monetary metal is strengthening as the glow of the US dollar weakens.
(Source: WGC)
Analysts in the report said, "EMDE central banks, which have been the main driving force behind gold purchases since the global financial crisis in 2008, seem to be more pessimistic about the future share of the US dollar in global reserves and more optimistic about gold. However, it is also worth noting that the proportion of respondents from developed economies who believe that gold will account for a larger proportion in global reserves has increased significantly from 38% in 2023 to 57% in 2024."
Attendees said that as central banks around the world seek to move away from the US dollar to diversify, interest rates, inflation concerns, and geopolitical instability remain key factors in central bank reserve management decisions, consistent with last year's response.
The survey showed that central banks are willing to hold gold because gold is seen as a long-term store of value, an inflation hedge tool, and performs well in times of crisis, making it an effective investment diversification tool. The key reason that received the most votes was that gold has no default risk.
(Source: WGC) "These results seem to reflect a potential theme among EMDE central banks, but also highlight the strategic role of gold for an increasing number of central banks in developed economies in times of uncertain geopolitical periods and renewed concerns about financial stability. This highlights the challenging economic and strategic environments faced by both groups."
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(Source: WGC)
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