The report stated that gold was the second-largest global reserve asset at market prices in 2024, after the US dollar.

A European Central Bank report stated that gold reserves held by central banks in 2024 are close to levels last seen in the Bretton Woods era.

The report titled ‘Gold demand: the role of the official sector and geopolitics,’ indicated that the commodity now accounts for a far smaller share of total gold supply. “This stockpile, together with high prices, made gold the second largest global reserve asset at market prices in 2024, after the US dollar,” the report said.

In 2024, central banks’ demand for gold remained at record highs and accounted for 20% of global demand, in contrast to around one-tenth on average in the 2010s.

Gold prices have been on the rise as multiple wars, economic uncertainty, and trade tensions have enhanced the yellow metal’s appeal as a safe-haven investment.

The report suggested that gold demand for monetary reserves rose sharply in the wake of Russia’s full-scale invasion of Ukraine in 2022 and has remained high.

“However, gold purchases for jewelry consumption and investment continued to account for the bulk of global gold demand,” it said.

Some central banks in the emerging and developing economies cited concerns related to sanctions and the possible erosion of the role of major currencies as reasons for holding gold.

A survey of 60 central banks conducted by the World Gold Council between February and April 2024 suggested that gold being a long-term store of value and an inflation hedge, as well as its good performance during times of crisis, were drivers of central banks’ gold holdings. The yellow metal being an effective portfolio diversifier was also cited as a prime reason.

Spot gold prices rose 0.28% on Wednesday and traded over the $3,330 per ounce mark following the release of the inflation data that showed price rises were slower than expected. Gold had topped the $3,400 mark in May.

The SPDR Gold Trust (GLD) and the iShares Gold Trust (IAU) traded nearly 0.06% higher on Wednesday.

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