The World Gold Council (WGC) on Monday said that ‘Central banks continue to be positive on gold, with about the same number of central banks expected to buy gold compared with last year.’ The '2021 Central Bank Gold Reserves (CBGR)' survey also noted that central banks are also increasingly valuing gold's performance during periods of crisis as this attribute now tops their rationale for holding gold.
These results come amid ongoing uncertainty that looms large from the Covid-19 pandemic, a situation that has added significant complexity to central bank reserve management.
Several of the survey’s findings indicated this growing complexity, with 84 percent of respondents reporting that uncertainty over the post-Covid economic recovery is relevant for their reserve management decisions.
The same proportion of respondents say that negative rates – the most relevant factor in last year’s survey – continue to inform their investment decisions, alongside the continuation of expansive monetary and fiscal policies, which, combined with the prospect of rising inflation, will likely be at the forefront of central bankers’ concerns for the foreseeable future, the council said.
Looking ahead, the World Gold Council report said that central banks will need to balance financial and geopolitical uncertainty with a potentially strong pickup in global growth.