RECORD NUMBER OF CENTRAL BANKS PLAN GOLD PURCHASES

A record 45 per cent of central banks expect to increase their gold holdings over the next 12 months, according to a survey by the World Gold Council. This figure rises from 43 per cent the previous year. Nearly 90 per cent of reserve managers anticipate that central bank gold holdings will continue to rise globally. Gold has become the top reserve asset, surpassing US government treasuries.

Central banks cited geopolitical uncertainty in the Middle East, inflation concerns and potential trade conflicts as reasons for expanding gold reserves. Over 80 per cent of respondents recognised gold's value as a portfolio diversifier. Banks have been accumulating gold in recent years to secure alternatives to the US dollar as a reserve currency. Shaokai Fan, global head of central banks and head of Asia-Pacific at the World Gold Council, stated that a record number of respondents plan to add gold to their reserves within the next year.

Looking ahead, 84 per cent of central banks believe gold will hold a higher share of total reserves within five years, up from 76 per cent previously. This outlook is shared by both developed and emerging market central banks. Nearly 75 per cent of reserve managers expect the US dollar's share of reserves to be lower in five years. The International Monetary Fund has found that whilst the dollar maintains its position as the dominant reserve currency, its hold is weakening.