ANZ: Central Banks Continue Gold Stockpiling

ANZ note “global central banks are diversifying foreign reserves and accumulating gold to hedge against geopolitical risks and economic uncertainties. Their share in annual gold demand has nearly tripled to 25-30%.”

• “Recent inflation shocks globally, aggressive policy rate hikes in the developed markets and valuation losses on foreign currency reserves held by EM central banks have enhanced gold’s appeal relative to bonds in their portfolios.”
• “Depleted trust in the US fixed income assets and the rise of non-reserve currencies are other themes that could support central bank gold buying.”
• “EM central banks could purchase over 600 tonnes of gold annually until 2030, to take its share in their foreign reserves to 10%. China will likely occupy the lion’s share in global official gold demand.”
• “The recent consolidation in the gold price may extend till Q1 2024, but we expect the price to rise to $2,200/oz by year-end. Upcoming elections and rate cuts, whenever they happen, will support gold demand.”