Fallout from US sanctions on Russia helped fuel 18 per cent leap in purchases last year
surged to its highest in more than a decade in 2022, fuelled by “colossal” central bank purchases that underscored the safe haven asset’s appeal during times of geopolitical upheaval.driven by a 55-year highCentral banks hoovered up gold at a historic rate in the second half of the year, a move many analysts attribute to a desire to diversify reserves away from the dollar after the US froze Russia’s reserves denominated in the currency as part of its sanctions against Moscow.
“Since 2010 central banks have been net purchasers of gold following two decades of net sales. What we have seen recently in this environment is central banks have accelerated their purchases to a multi-decade high,” he said. He added that a lack of “counterparty risk” was a key attraction of the metal for central banks, compared with currencies under the control of foreign governments.
James Steel, a veteran precious metals analyst at HSBC, said that “portfolio diversification is the main reason” for US dollar-laden central banks buying gold. He adds that “a key reason for choosing gold is that central banks are limited in what assets they can hold, and they may be reluctant to commit to other currencies”.
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