• Gold valuable on the balance sheet
• The price of gold rises at the onset of a crisis
• Recovery in sight thanks to cooling inflation
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According to the World Gold Council, the central bank of Uzbekistan has increased its gold reserves by 25 percent to almost 60 percent. This is contrary to earlier statements that they intend to reduce gold reserves to below 50 percent. Speaking to Bloomberg about the initial plans to invest in Chinese and US government bonds, Deputy Chairman of the Uzbekistan Monetary Authority Behzod Hamraev told Bloomberg that he had thought about it, “but the market itself didn’t allow us to do that.”
Record volume: gold purchases by central banks in the third quarter
According to data from the World Gold Council, global central banks accumulated a record-breaking 400 tons of gold in the third quarter of 2023, with Uzbekistan buying 26 tons and Turkey – the quarter’s biggest buyer – 31 tons. Together with the USA, Germany and Italy, Uzbekistan has the highest percentage of gold in state reserves.
The landlocked Central Asian country also buys domestically produced gold, which totals about 100 tons per year, up from 86.5 tons this year, according to the World Gold Council report. Uzbekistan thus increased its total stocks to 390.0 tons (as of September 2022).
Not All Gold Buyers Are Known: The World Gold Council is recording a growing number of estimated gold purchases. Countries like China and Russia are known for not reporting their gold purchases or only with a delay. Therefore, purchases recorded for the third quarter could have been made earlier, but the report says this is unlikely.
Reserves pay off: Gold sales at top prices
According to the deputy chairman, the National Bank of Uzbekistan already opted for gold in 2020 because the prices were “really good”. After half of Russia’s foreign exchange reserves were frozen in spring 2022 as part of sanctions against Russia over the Ukraine war, gold proved valuable on the balance sheet, with the price per ounce rising to a 52-week high of 2,049.85 U.S. dollar. As early as March, the former Soviet republic used the record prices to sell some reserves. The price of gold usually rises when a crisis begins, but the big question now is whether it will do the same when liquidity falls, Behzod Hamraev told Bloomberg.
Since March of this year, the price of gold has been falling visibly in the face of rising interest rates, but was able to rise in early November due to cooling inflation. Experts assume that the price of gold has found a bottom. December mex gold futures are trading higher again.
Editorial office finanzen.net
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