Commentary: Why Gold is Actively Bought All Over the World

In the third quarter of 2022, the central banks of various countries bought around 400 tons of gold. This marks a record for the last half century. The volumes are more than four times higher than in July-September last year. During the 9 months, central banks already purchased 673 tons, for comparison - 454 tons had been purchased for the whole of 2021.

Record purchases of gold by world central banks are due to the desire to contain inflation risks. In addition, central banks want to diversify reserves by reducing the share of assets in foreign currencies after precedents with the freezing of Russian accounts, says Moscow Analytical Center expert Anton Mikelevich.

The hike in interest rates by the Federal Reserve and the strengthening of the US dollar in the world made gold less attractive target for investment. In the third quarter of 2022, the central banks of Turkey, Uzbekistan, Qatar and India bought a significant amount of gold.

The Bank of Russia stopped purchasing gold in March-April 2022. In addition, the import of gold from Russia was embargoed by the USA and the EU. The Russian Federation is also excluded from the LBMA (London Bullion Market Association). Currently, the Russian authorities are studying the issue of creating their gold bullion standards based on consultations between the Central Banks of the countries of the Eurasian Economic Union (EAEU). The Price Setting Committee should include central banks and other leading financial and credit organizations from the Eurasian Economic Union, and in the future - major gold players, including China, India, Venezuela and Peru.