25% of central banks to increase gold holdings amid global uncertainty

More central banks are expected to increase their gold holdings this year as they continue to view bullion as a reserve asset.

In a World Gold Council (WGC) survey of central banks, 25% said they planned to buy more gold over the next 12 months, up from 21% last year.

Central banks are also more bullish this year on gold as a reserve asset, with 61% of respondents saying global gold reserves will increase over the next 12 months.

“Gold continues to be viewed favorably by central banks as a reserve asset,” the World Gold Council said.

The historical position of the precious metal is now the main motivation for central banks to buy gold, as cited by the majority (59%) of respondents.

Gold’s ‘zero default risk’, as well as its ‘crisis performance’ and ability to hedge against inflation are also among the main reasons why central banks are increasing their holdings of gold.

Good delivery bars”

Of those who buy the precious metal, nearly half (46%) said they acquire gold on the global OTC market. For nearly half (43%) of economies, gold is a legacy asset, while 22% are increasing their holdings through domestic purchases.

About 15% of central banks opt for off-market transactions and 17% acquire financial derivatives on gold.

Most central banks (85%) buy gold that meets the standards set by the London Bullion Market Association, or those called “good delivery bars”, while a smaller number buy gold gold and kilo bars.

(Reporting by Cleofe Maceda; editing by Seban Scaria)

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