High demand for gold from central banks propped up the unprofitable gold price when global interest rates were high in 2022-2023 and then slowed with this year’s 28% rally in the gold spot price. China’s central bank refrained from buying gold for the fifth consecutive month in September.
Despite the gold rallyRepresentatives from the central banks of the Czech Republic, Mongolia and Mexico told the conference that having gold in reserves still matters to them, although each has their own reasoning.
The importance of gold as a safe asset is increasing for Mongolia’s reserves, Enkhjin Atarbaatar, head of the financial markets department at the Central Bank of Mongolia, said at the conference.
For him Czech National Bank (CNB), gold is considered a pure reserve diversifier, said Marek Sestak, deputy executive director of the CNB’s risk management department.
All three said they were not currently active in gold derivatives and that London remained the main storage location for their gold as a trading hub, while only Mongolia had limited appetite for repatriating gold for storage at home. Global central banks increased purchases for their reserves by 6% to 183 tons in the second quarter, according to the World Gold Counciland are on track to reduce purchases in 2024 by 150 tons from 2023.
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