In 2024, central banks globally increased their reserves of gold on the books by an unprecedented 1,044.6 tonnes. This was the 15th year in a row that gold reserves have seen an increase. This trend signals a shift in monetary policy as central banks, including Poland and Uzbekistan, navigate an evolving economic landscape characterized by geopolitical tensions and fluctuating asset values.
April 2024 saw central banks worldwide increase their reserves by a net total of 12 tonnes globally. This decision is further evidence of their prudence even as gold prices were up to $3,500 per ounce. The National Bank of Poland was the biggest contributor to this phenomenon, contributing a hefty 12 tonnes to the trend. This enlargement increased its total reserves to 509 tonnes, enabling it to officially now surpass the European Central Bank. Governor Adam Glapiński underscored Poland’s desire to raise its gold share to 20 percent of its reserves, and said,
“This makes Poland a more credible country, we have a better standing in all ratings, we are a very serious partner, and we will continue to buy gold.” – National Bank of Poland Governor Adam Glapiński
Poland became the biggest buyer of gold in 2024, purchasing 90 tonnes. This major acquisition represents a significant strategy shift for the country. At the same time it tries to boost its financial stability and financial credibility, amid the unfolding global uncertainty. The effect was a $1 billion (11-tonne) drop in the reserves of the Uzbek central bank over this time. Due to this, it proved to be the biggest seller during Q1 2024.
One reason for this has been an explosion in gold purchases. This jump comes on the heels of an extraordinary year for central banks in 2022, who made the largest net purchases on record since data tracking began in 1950. The long-term picture perfectly tracks the end of dollar convertibility into gold in 1971. This conference represented one of the great turning points in the world’s monetary systems.
In April, central banks made a modest cut in purchases because gold was climbing in price. Despite the lull, analysts are still bullish on potential future transactions. As the World Gold Council noted, central banks are often strategic in how they buy gold. That indicates increasing costs aren’t going to throw their long-term agendas off course. The Council stated,
“While the rally to multiple new record highs is unlikely to deter central banks from buying gold – as they tend to be more strategic in nature – it could explain some of the deceleration in the pace of monthly net buying.” – World Gold Council
This strategic hoarding action indicates a more general recognition of the economic and geopolitical forces that are governing the financial markets. Council members pointed out how fickle data on gold purchases can be. They cautioned that it does not necessarily signal future trends.
“The data series is very volatile, meaning that activity in one month is not necessarily an indication of activity in subsequent months.” – World Gold Council
Central banks likely to continue adding gold even as buying patterns shift. This decision is based on the current unpredictable economic climate and the trade related risks associated with U.S. assets.
Today, perhaps the most powerful force in the global gold market is the People’s Bank of China. Its published official reserves of 2,294 tonnes may not reflect the US’s real holdings. Analysts are concerned that the Chinese central bank likely holds far more gold than it publicly declares. This reality underscores the opacity of international financial reserves.