Gold Resurges Amid Global Uncertainty

For decades, gold was considered little more than a novelty in the global financial system. However, its value has been increasing steadily since the US abandoned the gold standard in 1971.

The share of gold in worldwide official reserves fell from an average of 50% in the 1970s to about 10% early this century. But now, central banks globally have cut the share of US dollars in their reserves from 60% to 40%, and stockpiled gold correspondingly.

The People's Bank of China has bought gold for a record unbroken streak of 21 consecutive months, adding a net 20 tonnes in July alone. The combined central bank buying of gold has totalled 1000 tonnes a year over the past four years, double the average of the previous decade.

The rise in gold's value is partly attributed to the uncertainty caused by former US President Donald Trump. His policies have led to political instability, economic instability, and trade instability, making investors seek safe-haven assets like gold.