11 July 2023
Countries are repatriating their physical gold reserves to safeguard against sanctions on foreign assets, while increasing purchases as a hedge against inflation. Central banks globally recorded record gold purchases in 2022, driven by concerns over high inflation and volatile bond prices. The decision to buy physical gold instead of derivatives or ETFs was influenced by fears of frozen assets following the freezing of Russia’s reserves. Central banks are increasingly holding gold domestically, with 68% doing so in 2023, compared to 50% in 2020. The trend is a response to the confiscation of Russian assets and the desire for safe-haven assets. The repatriation and increased gold purchases contributed to a rally in bullion prices.