The Strategic Role of Gold Bullion in Central Banks’ Reserves: A 2024 Perspective

1.  Increased Buying Activity in 2024

In 2024, central banks globally are showing an increased appetite for gold bullion. This surge in purchasing activity reflects a heightened sense of economic uncertainty and a strategic shift towards strengthening national reserves.

• China: As of Q2 2024, the People’s Bank of China (PBoC) holds approximately 2,264 tonnes of gold, accounting for about 4.9% of its total reserves. In the first half of 2024, China reported a net purchase of 29 tonnes of gold, increasing its total holdings by 1.3%. Despite reporting no changes to gold reserves in the two preceding months, China’s continued accumulation of gold underscores its strategy to diversify its foreign exchange holdings and enhance financial stability amidst global uncertainties.
  
• Singapore: As of Q2 2024, Singapore’s gold reserves stand at approximately 249 tonnes. The Monetary Authority of Singapore (MAS) increased its gold holdings by around 24 tonnes in 2023 and has added another 10 tonnes by mid-2024. This substantial increase highlights Singapore’s ongoing strategy to bolster its financial stability and protect against global economic fluctuations.
• Other G20 Countries: Several other G20 countries are also expanding their gold reserves. Nations such as India and Russia are increasing their holdings, reflecting a broader trend among central banks to accumulate gold as a hedge against financial uncertainties and geopolitical risks.

The increased buying activity can be attributed to several factors:

• Inflation Concerns: Rising inflation rates and the potential for further economic instability have prompted central banks to secure their reserves with gold.
• Geopolitical Tensions: Ongoing geopolitical tensions and trade uncertainties are driving central banks to enhance their gold reserves as a protective measure.
• Currency Diversification: As central banks seek to reduce exposure to any single currency, gold provides a stable alternative that is less susceptible to fluctuations in currency values.