The World Gold Council conducts an annual survey on Central Banks globally on their strategic considerations with regards to their gold related decisions. The survey was conducted between 23rd February to 29th April 2022 and there was a total of 57 participating Central Bank respondents ranging from advanced, emerging markets and developing economies.
The key highlights are as follows:
1. Relevant topics for gold reserves management decisions
91% is due to low/negative interest rates, 88% for inflation concerns and 84% attributed towards geopolitical instability.
2. Gold reserves holdings
25% will increase their gold reserves during this year whilst 70% will maintain their existing holdings. Interestingly 0% expect any decrease of their inventory.
3. Rationale for higher level of reserves of FX & Gold compared to 5 years ago
39% is kept as a buffer to utilize in times of emergencies and crisis.
Followed by 34% to support the domestic financial system and 32% to cash in on capital gains. 24% respondents preferred not to answer on this point.
4. Decision to hold gold
59% is mainly because of gold's historical position. The other main reasons are due to gold's performance during crisis, long term store of value/inflationary hedge, no default risk and its effectiveness as a portfolio diversifier.
For more in-depth findings and insights, the report is downloadable from the below link.