In recent years, central banks around the world have continuously increased their gold reserves, becoming an important force supporting the long-term rise in gold prices. According to data released by the World Gold Council, many central banks have maintained a purchasing trend for gold over several consecutive quarters. This large-scale and sustained gold buying behavior has injected strong long-term momentum into the gold market.
So, why are central banks around the world so fond of gold? Firstly, gold has natural safe-haven properties and value-preserving functions. Against the backdrop of slowing global economic growth and complex geopolitical situations, the stability of fiat currencies such as the US dollar and euro is under challenge, while gold, as a credit risk-free asset, can effectively hedge against currency devaluation and inflation risks, making it an important choice for the diversification of foreign exchange reserves for central banks in various countries.
Secondly, the relative weakening of the dollar's hegemonic position has also driven the behavior of central banks to purchase gold. For a long time, the dollar has been the world's primary reserve currency, but in recent years, the volatility of US monetary policy has been considerable, with frequent switches between interest rate hikes and cuts, bringing significant risks to the foreign exchange reserves of various countries. To reduce dependence on the dollar, many countries have started to increase their gold holdings, optimize their foreign exchange reserve structure, and enhance the safety and stability of their reserve assets.
Furthermore, the role of gold in international payments and settlements is becoming increasingly prominent. In some regions with geopolitical conflicts, channels for dollar settlements are restricted, and the payment function of gold has been re-emphasized. This has made central banks aware that increasing gold holdings can not only preserve value but also ensure the smooth conduct of international trade in special circumstances.
From the perspective of the impact on gold prices, the continuous wave of central bank gold purchases provides solid bottom support for gold. Unlike short-term speculative capital, the behavior of central banks in purchasing gold is characterized by long-term stability and will not be easily sold off due to short-term price fluctuations. This significantly suppresses the downward space for gold. At the same time, news of central bank gold purchases also boosts market confidence, attracting more investors to enter the market and pushing gold prices steadily upward.
For medium to long-term investors, the global wave of central bank gold purchases is a strong basis for holding gold. Although short-term gold prices may fluctuate due to factors such as Federal Reserve policies and non-farm payroll data, in the long run, with the continuous support of central bank gold purchases, the investment value of gold remains prominent.
Of course, we cannot ignore short-term risk factors, such as rising US Treasury yields and a rebound in the dollar, which can exert temporary pressure on gold prices. Therefore, medium to long-term investors need to pay attention to market changes during their holding of gold and reasonably adjust their positions to achieve a balance between offense and defense.
