MIAMI (Reuters) – Central banks remain eager buyers of gold to diversify their reserves for financial or strategic reasons, representatives from three central banks told the London Bullion Market Association’s annual conference in Miami on Monday.
Increased demand for gold from central banks supported the price of non-yielding gold when global interest rates were high in 2022-2023, then slowed with the 28% price rally this year. The Chinese central bank stopped purchasing gold for the fifth month in a row in September.
Despite the gold rally, representatives of the central banks of the Czech Republic, Mongolia and Mexico told the conference that having gold in reserves is still important to them, even though each of them has their own reasoning.
The importance of gold as a safe asset for Mongolia’s reserves is increasing, Enkhjin Atarbaatar, head of the financial markets department at the Central Bank of Mongolia, told the conference.
For the Czech National Bank (CNB), gold is seen as a pure diversification of reserves, says Marek Sestak, deputy executive director of the risk management department at the CNB.
All three said they are not currently active in gold derivatives and that London remains the main storage location for their gold as a trading center, with only Mongolia showing limited interest in repatriating gold to store it at home.
Global central banks increased purchases for their reserves by 6% to 183 tonnes in the second quarter and are on track to slow purchases throughout 2024 by 150 tonnes from 2023, according to the World Gold Council.
