Central Banks Flock to Gold Amid Geopolitical Uncertainty

Central banks are increasingly turning to gold as a strategic reserve asset, according to OMFIF's Global Public Investor survey. The survey shows that 82% of central banks now hold physical gold, up from 71% last year, with 30% planning to add more in the next one to two years.

The shift towards gold is driven by concerns over geopolitical risk, with 51% of respondents citing this as a motivation. Gold's appeal lies in its sovereign risk-free status, carrying no counterparty risk and providing a hedge against black swan events.

However, the International Monetary Fund has cautioned that gold should be treated as a high-risk reserve asset due to its volatility and lack of liquidity. The IMF argues that gold's re-emergence in reserve portfolios is largely driven by valuation gains rather than new purchases.