Central banks increase gold purchases as de-dollarization intensifies.

Metals consultancy Metals Focus recently released its annual gold market report, predicting that central banks will acquire approximately 1,000 metric tons of gold in the near future. This projection comes amidst a backdrop of increased uncertainty in global financial markets, prompting central banks to diversify their reserves and hedge against economic volatility. According to the report, central banks have been steadily increasing their gold purchases over the past few years, with a record-breaking 2018 seeing the highest levels of acquisitions in nearly half a century.

The trend of central banks increasing their gold reserves is driven by several factors, including geopolitical tensions, trade disputes, and the risk of currency devaluation. Gold is often seen as a safe-haven asset during times of economic turmoil, providing stability and security in uncertain times. Central banks are turning to gold as a way to protect their assets and reduce their exposure to risks associated with traditional currencies and financial instruments.

In addition to geopolitical factors, central banks are also looking to gold as a means of diversifying their portfolios and reducing their reliance on the US dollar. The report notes that central banks are moving away from dollar-based assets in response to concerns about the long-term stability of the dollar and the potential impact of ongoing trade tensions on the global economy. As a result, central banks are turning to gold as a more reliable store of value and a way to mitigate the risks associated with an overreliance on one currency.

The report also highlights the growing trend of central banks repatriating their gold reserves from foreign locations to strengthen security and increase control over their assets. In recent years, several central banks, particularly in Europe, have taken steps to bring their gold holdings back within their own borders, citing concerns about the safety of their reserves held abroad. This trend is expected to continue as central banks seek to enhance the security and transparency of their gold holdings.

Overall, the outlook for central bank gold purchases remains positive, with Metals Focus predicting that acquisitions will continue to rise in the coming years. As global economic uncertainty persists and central banks seek to diversify their reserves, gold is expected to play an increasingly important role in the financial strategies of governments around the world. With its status as a trusted store of value and a reliable hedge against economic instability, gold is likely to remain a key asset for central banks looking to safeguard their wealth and protect against the uncertainties of the global economy.