Central banks return to the gold market

Author of the entry: Mennica Skarbowa
Date of entry: 07/06/2021

The trend of gold purchases by global central banks remains strong. However, these institutions have not said their last word and are announcing further increases in reserves. It is safe to say that developing countries are leading the way in this regard.

The turn of the 20th and 21st centuries was a period when central banks sold significantly more gold than they bought. However, the situation changed in the face of the first major financial crisis that the world faced in 2008. From that moment on, the status of the royal metal rose again. The rich Western countries stopped selling off their reserves, while developing countries began to expand theirs. Poland and Hungary joined this group of countries in 2018. Over time, this trend also reached Serbia and Slovakia. Today, it is believed that the increase in gold reserves by central banks is an unabated trend, especially in this part of Europe.

The beginning of 2021 was not impressive in terms of gold purchase statistics by banks. However, the situation began to change dynamically in March this year. According to the latest data, Thailand made the largest increase in reserves in May this year (46.4 tons). It is worth noting, however, that Brazil also purchased this precious metal, thereby expanding its reserves by 11.9 tons. This is the first purchase of gold by this country since 2012.

Poland, too, in line with announcements by the President of the National Bank of Poland, has begun the process of expanding its reserves. According to the latest NBP report, 1.9 tons of gold have been purchased recently. According to President Glapiński, this is only a harbinger of further and larger purchases of this precious metal.

Gold continues to enjoy unflagging popularity both in the financial sector and among individual consumers. The experiences of the past year and the reality of the pandemic have prompted everyone to manage their accumulated capital more prudently and thoughtfully, and to seek a safe haven, which gold has been for years.