Central Banks Boost Gold Reserves Amid Economic Uncertainty

In November 2024, global central banks collectively increased their gold reserves by 53 tonnes, continuing a robust purchasing trend throughout the year. This surge in demand is largely attributed to emerging markets seeking to bolster their financial stability amid global economic uncertainties. The World Gold Council (WGC) noted that a decline in gold prices, influenced in part by the U.S. presidential elections, may have further incentivized these acquisitions.

The National Bank of Poland emerged as the foremost buyer, augmenting its reserves by 21 tonnes to reach a total of 448 tonnes. This acquisition aligns with Poland's strategy to increase gold's share in its reserves, approaching its target of 20%. Throughout 2024, Poland has been the largest purchaser, adding 90 tonnes to its holdings.

Other significant purchasers included Kazakhstan and China, each adding 5 tonnes. China’s acquisition is particularly noteworthy, as it resumed purchases after a six-month hiatus, increasing its total holdings to 2,264 tonnes, which constitutes 5% of its total reserves. Jordan increased its reserves by 4 tonnes, reaching 73 tonnes, while Turkey added 3 tonnes and engaged in reverse swap agreements with domestic banks to manage liquidity. The Czech Republic and Ghana also augmented their reserves by 2 tonnes and 1 tonne, respectively.

Gold prices are deeply influenced by macroeconomic factors, including interest rates, inflation trends, and geopolitical stability. The ongoing trend of central bank purchases indicates concerns about the long-term sustainability of fiat currencies, particularly the U.S. dollar, as the global reserve currency. In 2024, the Federal Reserve's hawkish monetary policy aimed at combating inflation increased the opportunity cost of holding gold, temporarily applying downward pressure on prices. However, sustained geopolitical tensions, such as conflicts in Eastern Europe and trade wars, have bolstered safe-haven demand.

As of January 9, 2025, gold is trading at approximately $2,669.95 per ounce, reflecting an increase of 1.88% year-to-date. The gold price chart exhibits a strong uptrend since breaking out of the $2,000 psychological resistance in early 2024. The 50-day and 200-day moving averages (MAs) indicate a bullish crossover, suggesting sustained upward momentum. The Relative Strength Index (RSI) is currently at 65, which is near overbought levels but indicates strong market demand. Key support levels are identified at $2,500 and $2,400, while resistance looms at $2,750 and $3,000.

The sustained interest in gold by central banks underscores the metal's enduring appeal as a safe-haven asset, particularly amid global economic uncertainties. Factors such as geopolitical tensions, currency fluctuations, and concerns over economic stability have driven these institutions to diversify their reserves, reducing reliance on traditional currencies like the U.S. dollar.

With forecasts suggesting gold could reach $3,000 per ounce by the second quarter of 2026, the metal remains a cornerstone of wealth preservation strategies. Factors such as ongoing geopolitical risks, central bank policies, and the declining real yields in traditional assets all contribute to the bullish outlook for gold. Goldman Sachs has also emphasized the growing divergence between gold demand and new mine supply, suggesting upward price pressures will persist.

​The continued accumulation of gold by central banks highlights a strategic shift towards asset diversification and risk mitigation in an unpredictable global economic landscape. This trend not only influences global gold markets but also reflects broader economic strategies employed by nations to safeguard their financial stability. As geopolitical tensions and economic uncertainties persist, the role of gold as a fundamental component of national reserves is poised to remain significant."