Central banks’ interest in gold remains strong – WGC survey


KUALA LUMPUR – Central banks continue to show strong interest in gold, with roughly the same number of them likely to buy the precious metal this year, said the World Gold Council (WGC).

In its 2021 Central Bank Gold Reserves Survey, 52 per cent of the 56 central banks that responded believe central banks will add more gold over the next 12 months.

However, this is lower from last year when 75 per cent of respondents believed that central banks would add more gold in the following one year.

The percentage of respondents that would increase their own gold holdings climbed to 21 per cent versus 20 per cent last year, WGC said.

“No central bank is planning to decrease its gold reserves (compared to) four per cent in last year’s survey,” the council said.

It noted that there is less conviction in the overall direction of the community but more conviction about each individual institution’s direction.

“This could stem from the slowdown in central bank gold buying in 2020 and ongoing concerns about global financial stability,” WGC said.

It said gold performance during times of crisis has risen to become most relevant reason to hold gold, climbing to second place in 2020 compared to fourth position in 2019.

The respondents also believe Good Delivery bars will remain the mainstay of central bank gold purchases.

“Kilo bars and doré are far less popular among central banks, although their proportion has risen slightly compared to previous years,” the council said.

Buying gold on the international over-the-counter market is expected to continue being the most common form of central banks purchase, although the percentage of central banks currently holding gold that said they do that has fallen to 43 per cent from 60 per cent last year.

WGC said emerging markets’ central banks rate gold’s investment-related aspects much more highly than their counterparts in advanced economies.