After years of accumulating gold, will central banks continue to stockpile the precious metal? A new survey suggests yes.
According to the World Gold Council’s Central Bank Gold Reserves (CBGR) survey, 20 percent of poll central banks plan to boost their gold holdings over the next 12 months. This is up from just eight percent a year ago.
The primary reason for greater gold purchases is that subzero interest rates are a crucial factor for reserve management decisions. Because of the coronavirus pandemic triggering expansionary monetary policies, central banks think ZIRPs and NIRPs are here to stay.
More than three-quarters (79 percent) note that gold’s performance during crises is an important reason to hold gold, up 59 percent from last year. Seventy-four percent also believe the metal’s lack of default risk is another imperative reason, up from 59 percent in 2019.
Central banks have been on a gold buying spree for years. Last year, central banks added about 650 tons.
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