Following sanctions on Russia by Western nations, more countries are reclaiming their gold reserves. Reuters notes this trend, drawing on a survey by the American investment firm Invesco that sampled central banks and sovereign wealth funds around the world.
In the survey, more than 85% of 85 government funds and 57 central banks anticipate higher inflation over the coming decade compared with the past. The West’s move to freeze a substantial portion of Russia’s roughly $640 billion in foreign exchange reserves last year has created a precedent that many central banks watch with concern.
Meanwhile, 60% of respondents feel that this precedent has boosted the appeal of gold as a safe asset. This year, 68% of participants said they have begun keeping gold at home, up from 50% who reported holding gold reserves in 2020.
The report indicates that the ongoing geopolitical tensions have prompted some central banks to repatriate gold holdings, choosing to store the metal domestically as a hedge against geopolitical risk. An estimated 80% of respondents expect geopolitical friction to be the primary risk in the coming decade.
It was noted that China’s central bank has increased its gold reserves in the last five months while reducing its holdings of U.S. government bonds.
Earlier reporting suggested that central banks around the world purchased record amounts of gold in the first quarter.