Central banks' gold reserves rise amid uncertainty and rising geopolitical tensions

According to information compiled by AA correspondent from the World Gold Council (WGC) "2024 Gold Demand Trends" report, central banks' demand for gold continues to increase in the medium and long term.

Gold demand is expected to reach unprecedented levels in 2024, driven by ongoing geopolitical and economic uncertainties, such as fears of inflation or a collapse in global trade, as well as interest from central banks and private investors. Central banks are set to continue their aggressive buying strategies in 2024, purchasing more than 1,000 tons of gold for the third consecutive year. Central banks purchased a total of 1,051 tons of gold in 2023, and added 1,045 tons of gold to their reserves last year.

Central banks’ gold purchases have been one of the main reasons why the ounce gold price has broken record after record. It is stated that the tendency of central banks to buy gold and hold high reserves stems from the economic risks that may be experienced in reserve money economies and increasing geopolitical tensions.

Gold reserves are defined as the portion of a country's currency reserves held by central banks in the form of gold bars. These reserves act as a hedge against economic uncertainty and can be used as a means of payment in times of crisis.

While the World Bank recommends that central banks hold up to 22 percent gold in their reserves, it is noteworthy that some central banks have gold reserves in their portfolios that far exceed this figure. According to the Council's survey, this trend of central banks will continue this year. 69 percent of central banks participating in the survey stated that they want to increase the gold ratio in their portfolios in the next five years due to inflation and geopolitical risks.

Poland is the country that buys the most gold in the world

Poland, which made the highest annual gold purchase in the country's history last year with 90 tons, became the country that made the most gold purchases in the world. The Polish Central Bank increased the share of the precious metal in its portfolio to almost 17 percent. Turkey followed with 75 tons.

As economic and geopolitical risks increase in the world, central banks, like investors, are turning to the "safe haven" gold, and Turkey ranks in the top 10 in the world's gold reserve countries. As of the end of 2024, Turkey has 615 tons of gold reserves. This constitutes 36 percent of the country's foreign reserves. In addition, in the week of February 14 of this year, the central bank's gold reserves increased by $1 billion 912 million, from $70 billion 563 million to $72 billion 475 million.

The US has the largest gold reserves

As of December 2024, central banks around the world have a total of 37,775 tons of gold reserves. According to the WGC, a total of 216,265 tons of gold was mined by the end of last year. 97,149 tons of this gold was used as gold jewelry. Central banks hold about 17 percent of the gold mined

The US, which is the country with the largest gold reserves, has approximately 8,133.5 tons of gold. The US's gold reserves make up 75 percent of its total foreign reserves. The US's gold reserves have a book value of $42.22 per ounce.

Germany, with its gold reserves constituting 74 percent of its foreign reserves, ranks second with approximately 3,351.5 tons. The IMF is in third place with 2,814 tons of gold reserves, Italy in fourth place with 2,451.8 tons, and France in fifth place with 2,437 tons.

Russia copes with sanctions with gold reserves

Russia, which is at war with Ukraine, has 2,335.9 tons of gold. Russia's gold reserves make up 32 percent of its total foreign reserves. One reason it remains resistant to Western sanctions is the country's high gold reserves.

China, the world's largest gold producer, ranks seventh, officially holding approximately 2,279.6 tons of gold, almost 6 percent of the portfolio. It is stated that the Chinese central bank will continue to purchase gold due to increasing trade and Taiwan tensions with the US. It is noteworthy that the Chinese central bank, which purchased 44 tons of gold last year, added approximately 5 tons to its portfolio in January.

Switzerland ranks eighth with 1,039.9 tonnes of gold, which makes up about 10 per cent of the central bank's portfolio, followed by India in ninth place with 876.2 tonnes and Japan in tenth place with 846. Turkey ranks 11th (in the top 10 excluding the IMF) with 615 tonnes.

Gold ounce price broke records 10 times this year

The price of an ounce of gold, which started this year at $2,623, has gained more than $330 since the beginning of the year, breaking records 10 times during this period. Analysts said concerns about the consequences of US President Donald Trump's aggressive tariff policy were affecting the markets.

Analysts reported that uncertainty has continuously increased the demand for gold as a safe haven since Trump took office on January 20, and also stated that demand from central banks, especially the People's Bank of China, has increased the price of gold per ounce.

President Trump's rise to power in the US is expected to further deteriorate relations between the US and China, increasing geopolitical risks and demand for precious metals.

Rising geopolitical tensions and the war in Ukraine, the drive to evade sanctions, the urge to avoid other external influences, and the weakening role of the dollar as an international reserve currency are all driving demand for the precious metal.

Meanwhile, with the influence of increasing applications in artificial intelligence and electronics in the technology sector, gold demand increased by 7 percent last year to 326 tons, thus affecting prices upwards.

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