Central banks will continue to buy gold in 2022 - World Gold Council Survey

LONDON (June 9)  Wednesday, the WGC said that 57 central banks responded to its annual Central Bank Gold Reserves (CBGR) survey in its published results. Among the respondents, 25% said they expect to increase their gold reserves in the next 12 months. In the 2021 survey, 21% of respondents planned to increase their gold holdings.

"The planned purchases are chiefly motivated by increasing concern about a possible global financial crisis, although anticipated changes in the international monetary system and concerns over rising economic risks in reserve currency economies are also major factors," the analysts said in the report.

The WGC said that this year's survey highlighted a new divide between central banks in developed economies and those in emerging markets and developing economies (EMDE). The report said that the 25% of central banks looking to buy are all from EMDE nations. In total, 80% of EMDE central banks expect global gold reserves to increase in the next year.

"More EMDE respondents regard 'shifts in global economic power' as a relevant factor in their reserve management decisions, which could indicate growing concerns over the threat of a decoupling between major economies amid ongoing tensions," the WGC said in the report. "EMDE central banks generally face greater challenges in maintaining orderly capital flows and currency stability. The results may indicate that these banks tend to view gold as a more important component of their overall reserve management strategy, especially at a time when there is a greater need for risk-mitigating assets."

The survey also highlighted the growing expectation that the U.S. dollar will continue to lose its dominance as a reserve currency. Central banks also see the euro losing prominence within the global currency market.

KITCO