More central banks plan to increase their gold reserves within the next year, driven by ongoing macroeconomic and political uncertainties despite the high prices of the precious metal, according to the World Gold Council’s (WGC) annual survey.
Gold demand from central banks has surged over the past two years as countries diversify their foreign currency reserves. This demand contributed significantly to the gold price rally from March to May, with the spot price reaching a record high of $2,449.89 per ounce on May 20.
“Despite record demand from the official sector in the last two years, coupled with climbing gold prices, many reserve managers still maintain their enthusiasm for gold,” said Shaokai Fan, WGC’s head of central banks sector, in a statement.
The survey, conducted between February and April and comprising 69 responses, revealed that 29% of central banks expect their own gold reserves to increase over the next 12 months. This marks the highest level since the survey began in 2018 and represents a rise from 24% in 2023.
Additionally, 81% of respondents anticipate that global central bank gold reserves will increase over the next year, up from 71% in the previous year.
While gold’s “historical position” as a reserve was the primary reason for holding it in previous years, this factor has dropped to fifth place. The top reasons for the anticipated increases are now “long-term store of value or inflation hedge,” “performance during times of crisis,” and “effective portfolio diversifier.”
The survey also highlighted changes in gold storage practices. Some 41% of 58 respondents indicated that their gold reserves are kept in domestic storage, up from 35% in 2023. Nevertheless, the Bank of England remains the most popular storage location, listed by 55% of respondents.
Among 57 respondents, 15% plan to alter their gold custody arrangements in the next year, a significant increase from 6% in 2023. These changes include diversifying overseas storage and adjusting domestic storage levels.
