Central banks around the world have bulked up their reserves of gold, a safe but cumbersome investment that has been revived in popularity by intensifying geopolitical tensions and concerns over inflation.
This year, the price of gold exceeded $5,000 per troy ounce for the first time in history. One major reason prices have soared — doubling in a year and a half — is the demand from emerging economies: The central banks of Poland, Turkey, India and China have been some of the biggest buyers of gold in the past several years.
The shock to the global financial system from the war in the Middle East has underlined again how some central banks turn to gold during times of stress.
Central banks have continued to add to their holdings of gold since the conflict began in late February, including those in China, Poland, the Czech Republic and Uzbekistan, according to data from the World Gold Council. In March, China’s central bank bought more gold than it had in more than a year. Guatemala also bought gold in March, for the first time in about six months, the council said.
“Recent market developments, driven by the instability in the Middle East, have reinforced our view that instability has become the defining feature of the global economy,” Adam Glapinski, the governor of the National Bank of Poland, said in response to written questions. “I would reiterate the importance of diversifying foreign reserves and the role of gold as a strategic asset.”
