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The world’s central banks are buying gold on a massive scale, returning to the time-tested asset to ensure stability amid growing geopolitical tensions and the risks of the global financial crisis. Gold is becoming the main hedge against a possible economic catastrophe caused by ideological and political conflicts. Greek media write about this.
China, Russia and other procurement leaders
Since the start of the war in Ukraine, China has acquired 316 tonnes of gold, while Russia and countries in Central Asia, the Middle East and India have also significantly increased their holdings. European countries, such as Poland and Hungary, have joined this trend.
The Bank of Poland aims to increase the share of gold to 20% of its reserves, while Hungary began large-scale purchases three years ago. “Gold strengthens confidence in the country and maintains financial stability,” the Central Bank of Hungary explained.
Gold price breaks records
As a result of massive demand, the gold price rose by 35% in 2024, significantly outperforming the US stock market (20%) and more than doubling the growth of European indices.
Reasons for gold demand
Key factors:
- Financial instability: US debts have reached 124% of GDP, raising concerns about the long-term sustainability of the economy.
- Asset diversification: Countries are seeking to reduce their dependence on the dollar, as its share of global reserves has fallen from 65% to 58% over the past decade.
- Protection from sanctions: Gold is a neutral and independent asset that is difficult to confiscate or block.
Expert comments
Experts, including Mohamed El-Erian, former head of the investment giant Pimco, emphasise that gold is becoming the foundation for a new financial system that does not depend on US dominance.
“This is a signal of imminent global change,” said one European banker.
Western politicians have also noticed the activity. European Central Bank Governor Christine Lagarde noted that China was buying gold on an unprecedented scale, although she stressed that the dollar was likely to retain its status.
Demand for gold continues to grow, both among central banks and private investors. Global economic and political risks dictate a return to the safe haven that this precious metal represents.
