Gold Demand Remains Strong Amid Geopolitical Risks
Turkish Central Bank Governor Fatih Karahan emphasized that central banks' demand for gold remains strong due to geopolitical risks. Speaking at the Budapest Financial Summit on September 16, Karahan stated that reserve managers must consider access to assets alongside safety, liquidity, and returns.
He noted that assets considered liquid under normal conditions may not be readily available during periods of stress. This has led central banks to reassess gold's role in their portfolios, but Karahan emphasized that this does not mean the end of the US dollar's dominance.
The dollar still accounts for a large share of foreign exchange reserves due to its deep and liquid markets, according to Karahan. He encouraged diversification and contingency planning, warning that geopolitical rivalry could expose central banks to larger and longer-lasting economic shocks affecting inflation expectations and decisions on wages and prices.