The President of the National Bank of Poland, Adam Glapinski, has revealed that the country will stockpile gold so that the metal will make up 20 percent of its reserves.
Poland’s National Bank became the joint biggest gold buyer in the second quarter of 2024 along with India.
During this time, the price of gold reached $2,500 (£1,892) per ounce.
Grzegorv Dróżdż, market analyst at Conotoxia, said: “At the end of the second quarter of this year, Poland’s gold reserves rose to 377.4 tonnes, and the pace of purchases of the bullion, held mainly at the Bank of England, since April this year has surpassed even the world’s largest economies.”
Central banks are buying up gold to diversify their reserves, protecting against big economic shocks like we have seen with Covid and the war in Ukraine.
Gold is seen as a safe bet by banks as its price fluctuates less than other assets.
Other countries invest in gold to make them less dependent on bigger countries like the US.
World Gold Council figures show that gold demand was up 183 tonnes in Q2, a 6 percent increase compared to this time last year. It was, however, a 39 percent drop quarter-on-quarter.
Mr Dróżdż added: “In Q2 2024, global gold demand, excluding over-the-counter (OTC) investments, fell by 6 percent year-on-year to 929 tonnes. The decline is mainly due to a 19 percent reduction in jewellery consumption, in response to record high prices for the king of metals.
“However, including OTC investments, total gold demand increased by 4 percent year-on-year to reach 1,258 tonnes, the highest level since 2000. Much of this demand was generated by central banks, which increased their purchases by 6 percent, adding 183 tonnes, mainly to protect and diversify their portfolios.”
Turkey, Jordan, Qatar, Russia, Uzbekistan, Kyrgyzstan, Iraq and the Czech Republic’s central banks all boosted their purchases of gold in Q2.
Mr Dróżdż explained what factors can cause fluctuation in the gold market.
He said: “The gold market, like many others, is driven by two forces: demand and supply. In the past few quarters, an increase in demand has been particularly evident.
“Moreover, the continued weakening of the dollar may indicate that gold could outperform other key assets in the near term. Conotoxia’s baseline scenario assumes that gold price momentum could slow down by the end of the year, with a possible correction, but is likely to remain above the $2,500 (£1,892) per ounce level.”
