The World Gold Council (WGC) in its latest 'Central Bank Gold Reserves (CBGR)' survey highlights several notable shifts in central bank attitudes towards gold this year.

Increased interest in gold’s performance during times of crisis would suggest that the fast-changing financial and economic landscape has sparked a significant transformation in investment attitudes.

Simultaneously, factors that were relevant before the Covid-19 outbreak, such as negative interest rates, heightened political risk, concerns about fiscal sustainability and changes to the geopolitical order, continue to inform central banks’ view of gold.

Looking ahead, the WGC says profound uncertainty about the impact of the pandemic may accelerate some of these factors and, in turn, prompt central banks to look more closely at gold.

The markedly higher proportion of respondents who are planning to add gold to their reserves this year may also reflect concerns about the unpredictable impact of the pandemic, it points out.

Ultimately, the combination of recent market developments and persistent long-term trends has strengthened central banks’ interest in gold, pointing to continued purchases from the official sector.

The survey shows that 20% of central banks intend to increase their gold reserves over the next 12 months, compared with 8% of respondents having indicated so in the 2019 survey.

The council says this increase is particularly notable, as central bank buying has been reaching record levels in recent years, with 650 t added to reserves last year alone.

Several of the survey’s key findings may explain the significant growth in planned gold purchases by central banks − 88% of respondents say that negative interest rates are a relevant factor for their reserve management decisions.

The WGC notes that the continuation of expansionary monetary policies owing to the Covid-19 pandemic, which coincided with the fieldwork of this survey, will likely keep interest rates near zero for the foreseeable future.

Further, 79% of respondents view gold’s performance during times of crisis as an important reason to hold gold, up from 59% in 2019; while 74% of respondents consider gold’s lack of default risk to be an important reason for holding the metal, up from 59% in 2019.

“These shifts may suggest a re-evaluation of gold’s role amidst ongoing financial and economic uncertainty, while also reflecting long-term concerns about fiscal sustainability as government stimulus is deployed to cushion the global economy,” the WGC explains.

Recent years have also seen an increase in the number and diversity of central bank gold buyers.

In 2010, only eight central banks were net buyers of gold. By 2019, that number had almost tripled to 22, representing 12% of all central banks globally.

The 2020 CBGR survey points to a continuation of this trend.

Over the next 12 months, 75% of respondents say that global central bank gold holdings will increase. This marks a noteworthy rise from 54% in 2019.

The WGC distributed the survey to 150 central banks globally between February 20 and April 17, with a total of 51 eligible responses received.