Central banks have bought a record 1,000 metric tons of gold in the past year, doubling the decade’s average. This frenzy, reported by CNBC, signals deep concerns about global economic stability. Let’s explore what’s behind this trend.
Geopolitical Instability Drives Purchases
Russia’s invasion of Ukraine in 2022 sparked a gold-buying spree. Central banks in emerging economies are stockpiling gold to shield against sanctions and trade conflicts. The World Gold Council notes geopolitical risks as a key driver, with gold now accounting for 20% of global reserves.
Inflation and Currency Worries
Persistent inflation is eroding trust in fiat currencies. Central banks see gold as a hedge against currency devaluation. The U.S. dollar’s dominance is under scrutiny, especially with BRICS nations exploring a precious metals exchange. This shift reflects broader economic unease.
Slower Pace Ahead?
Despite the gold rush, some economists predict a slowdown. Capital Economics suggests central banks may ease purchases as prices soar. Still, gold’s role as a reserve asset remains unchallenged. Investors are watching closely, as this trend hints at deeper economic shifts on the horizon.