Central banks are recasting gold as a monetary asset as sanctions, inflation and credit risk push reserve managers away from paper currencies, World Gold Council Senior Market Strategist Joseph Cavatoni said.
Central banks have bought an average 1,000 tonnes a year over the past four years, double the previous decade’s pace. The council’s June survey of 76 central banks found 89% expected global holdings to rise over the next 12 months and 45% expected to add to their own reserves.
“I think it is absolutely structural and that is the right way to think about it,” Cavatoni told The Northern Miner’s Western Editor, Henry Lazenby, this month at the Rule Symposium on Resource Investing in Boca Raton, Fla.
The shift gives bullion a deeper source of demand than investor funds or jewellery and could support prices even when high Western interest rates deter buyers. Cavatoni warns producers must still turn higher prices into output and cash while controlling costs and political and operating risks.
Watch the full interview below:
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