Gold emerges as top hedge for central banks amid geopolitical risks: Report
New Delhi, June 30
Heightened geopolitical risks are prompting central banks globally to shore up their gold reserves as a hedge.
According to a public investor survey by OMFIF, a net 30 per cent of central banks plan to increase their gold allocation over the next one to two years. The report said that 82% of central banks held physical gold in 2026, up from 71% last year.
Around 61 per cent of central banks expect the gold prices to settle between USD 5,000 and USD 6,000 per ounce by June 2027, while 28 per cent say that current prices are discouraging enough to make further purchases.
"The motivation behind gold purchases is increasingly strategic rather than purely financial. Protection against geopolitical risk is cited by 51% of respondents, up 11% from 2024," according to the report.
The survey, carried out by the Official Monetary and Financial Institutions Forum, highlights another important shift among central bankers as more of them plan to cut their dollar allocations over the next decade, and this shift is more pronounced in emerging markets.
The euro and renminbi are the top alternatives to the dollar among central banks, the report said, while highlighting that emerging market currencies are also getting attention.
"This year, 29% of respondents plan to increase euro holdings in the long term, up from 22% last year," the survey report stated.
However, the report pointed to the fact that both currencies have some handicaps.
"Neither the euro nor the renminbi fully solves reserve managers' problem: the former lacks a single, deep safe asset market, while the latter remains constrained by market structure and geopolitical concerns," the report said.
The adoption of artificial intelligence (AI) among central banks to improve efficiency and decision-making is on the rise.
"89% of developed economy central banks report some form of artificial intelligence implementation, compared with 44% of emerging market peers," the report mentioned.
The report found that volatility is being seen as something that needs better management rather than just a wait-and-watch approach.
"The old assumption that public investors can wait for the environment to normalise looks increasingly unrealistic," the report said.
— ANI
Reader Comments
Interesting shift away from dollar. China and Russia have been leading this for years, and now everyone is following. The euro and renminbi still have issues though—makes you wonder if there's ever going to be a true alternative. Also, 89% of developed central banks using AI? That's impressive but also a bit scary! 😅
As an Indian investor, I've always believed in gold, but 30% of central banks planning to increase allocation is a huge signal. When the world's financial guardians are hedging, you know something is brewing geopolitically. That said, with gold at $5000-6000 per ounce predicted by 2027, maybe it's time to buy more before prices go even higher. Just my two paise. 🏆
Interesting but not surprising. The US dollar's dominance has been eroding for years, and the Russia-Ukraine war showed how easy it is to weaponize the financial system. Central banks are just being prudent. The euro and yuan have their own problems—Europe lacks safe assets, and China has capital controls. Gold is the ultimate neutral reserve.
About time! Every Diwali I tell my husband we need to buy more gold, and now even central banks agree. 😄 But seriously, with 82% of central banks holding physical gold, it shows trust in the yellow metal remains unshakeable. The AI adoption gap between developed and emerging markets (89% vs 44%) is concerning though—hope our RBI is catching up!
I have a slightly different take. While gold is a
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