Gold taking center stage over U.S. dollar in central banks' reserve holdings, according to the World Gold Council survey results.
Scoop: Central Banks Pref Gold Over Greenbacks!
Y'all ain't gonna believe this one! Central banks worldwide are hopping on the gold bandwagon, favoring the yellow metal over the almighty US dollar in their financial stashes, according to a recent report by Reuters.
Now, here's the tea. World Gold Council (WGC) conducted a survey between February and May, collecting responses from 73 central banks. And let me tell you, the demand for gold among these financial bigwigs has skyrocketed over the past three years, even with gold prices hitting record highs. That's right; gold touched an all-time high of $3,500.05 per ounce in April, marking a 95% increase since February 2022 when Russia invaded Ukraine.
So, here's why gold is more 'bling' than the buck these days! Three-fourths of the central banks surveyed believe that gold will make up a larger portion of their reserves within the next five years, up from 69% last year, and a whopping 95% expect central bank gold holdings to increase over the next twelve months.
Ironically, while gold's shining, confidence in the US dollar is dwindling. Seven out of ten central banks anticipate reducing their dollar-denominated reserves over the next five years. The Bank of England, it seems, remains the preferred vault for gold reserves.
But wait, there's more! Gold's phenomenal performance during crises, portfolio diversification, and inflation hedging are some of the key drivers behind central banks' plans to stockpile more gold in the coming year. Central banks have been hoarding over 1,000 metric tonnes of gold annually for the past three years, more than double the average of 400-500 tonnes in the previous decade.
Trade tensions and tariff risks are also shaping central bank reserve strategies. Almost six out of ten respondents identified these factors as relevant. Interestingly, 69% of central banks from emerging and developing economies highlighted this concern, compared to just 40% from advanced economies.
With all this gold grabbing, it's no wonder gold prices are reaching new heights. Who needs stability when you've got sparkle, right?
Investing in gold has become increasingly popular among central banks, with 73 of them surveyed by the World Gold Council expecting gold to make up a larger portion of their reserves within the next five years. Central banks anticipate reducing their dollar-denominated reserves over the next five years, as confidence in the US dollar wanes, while gold continues to gain value. Gold is being accumulated at an alarming rate by central banks due to factors such as portfolio diversification, inflation hedging, and its performance during crises.
