Three reasons to hold gold

DNVN - The top three reasons for holding gold today include gold's long-term value (88%), performance during crises (82%), and gold's role as an effective tool to diversify investment portfolios (76%).

According to the latest data released by the World Gold Council on June 18, more than four-fifths of central bank survey respondents said they expect central bankers to continue increasing their gold reserves over the next 12 months, the highest level recorded since the annual survey began.

The Central Bank Gold Reserves Survey (CBGR) 2024, which collected data from 70 central banks around the world, found that nearly 30% of central banks plan to increase their gold reserves in the coming year. Despite gold prices hitting record highs in 2024 and central banks buying continuously over the past two years, gold remains the preferred reserve asset for central banks globally.

Gold as an effective tool to diversify investment portfolio.

According to the report, reserve managers said they are turning to gold to mitigate risk and to hedge against future global political and economic uncertainties. While seven in 10 managers (71%) still cite gold’s legacy as a reason to hold, other reasons have taken hold this year. The top three reasons for holding gold now include its long-term value (88%), its performance during crises (82%), and its role as an effective tool for portfolio diversification (76%).

Central banks in emerging market and developing economies (EMDEs) maintain a positive outlook on the future share of gold in their reserve portfolios.

Notably, this view is shared by central banks in developed economies, which currently have a more positive view on gold: More than half (57%) of this group of banks said gold will account for a higher proportion of reserves in the next five years, a significant increase from 2023 (when 38% of respondents shared the same view).

Central bankers in advanced economies have also become more pessimistic about the share of the US dollar in global reserves, although this view is more common among developing and emerging market economies. More than half (56%) of those representing advanced economies believe that the share of the US dollar in global reserves will decline (up 10 percentage points from the same period last year), while 64% of EMDEs share the same view.

“Unusual market pressures, unprecedented economic uncertainty and political upheaval around the world have kept gold at the forefront of the minds of central banks, many of whom have become more aware of the value of gold as a way to manage risk and diversify their portfolios,” said Shaokai Fan, Regional Director for Asia-Pacific (excluding China) and Global Head of Central Banks at the World Gold Council.

It is worth noting that despite the record demand from central banks over the past two years and the continued rise in gold prices, many reserve managers remain bullish on gold. While price-related factors may temporarily slow purchases in the near term, the broader trend remains as managers recognise gold’s role as a strategic asset amid ongoing uncertainty.”

Phan Minh

Source: https://doanhnghiepvn.vn/kinh-te/ba-ly-do-de-nam-giu-vang/20240619021655076