Central banks extend optimism on gold against rising interest rates: World Gold Council

GOLD continues to be viewed favourably by central banks as a reserve asset. Nearly a quarter of 59 central banks surveyed intend to raise their gold reserves in the next 12 months, World Gold Council’s survey found.

The survey, published on Tuesday (Jun 6), also showed that seven in 10 central banks believed global central bank gold reserves will increase in the next 12 months – a 10-point increase from last year’s survey results.

Interest rate concerns prevailed as the top worry among respondents in influencing their reserve management decisions. This is followed by concerns over inflation, geopolitical instability and environmental, social and governance issues.

Factors which were of lesser priority, as compared with last year’s findings, include concerns over current or future pandemics, as well as digital currencies.

Respondents were also more pessimistic on the future role of the US dollar. Exactly half think that the percentage of reserves denominated in US dollar would stand at between 40 per cent and 50 per cent in five years’ time, down from the 51 per cent in Q3 2022.

Close to 60 per cent thought that gold would account for more five years from now – at between 16 per cent and 25 per cent of total reserves, as compared with the 15 per cent in Q3 last year.

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In April, global official gold reserves fell 71 tonnes, Europe, the Middle East and Africa (EMEA) World Gold Council’s monthly analysis – sourced primarily from the International Monetary Fund – indicated. This was chiefly due to Turkey’s 81 tonnes gold sale to satisfy strong local gold demand, the council said.

Despite the sizeable net selling from central banks in April, Krishan Gopaul, senior analyst, EMEA World Gold Council, maintained his expectation for central banks to remain net gold purchases this year.