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Central Banks To Amass $48,000,000,000 Worth of Gold This Year Amid US Dollar Weaponization: UBS

source-logo  dailyhodl.com 26 May 2023 00:11, UTC

Banking giant UBS says demand for gold from central banks around the world is likely to surge this year as countries back away from the US dollar.

In a new report, UBS says it expects central banks to accumulate 700 metric tons of gold worth $48.74 billion this year.

According to the financial titan, central banks are likely to continue stockpiling gold in the coming months due to persistent inflation and geopolitical concerns.

“Last year marked the 13th consecutive year of net gold purchases by global central banks and the highest level of annual demand on record dating back to 1950.

At 1,078 metric tons in 2022, central banks’ buying of gold more than doubled from 450 metric tons in 2021. Based on the 1Q23 data from the World Gold Council, central banks are on track to buy around 700 metric tons of gold this year, much higher than the average since 2010 of below 500 metric tons.

We think this trend of central bank buying is likely to continue amid heightened geopolitical risks and elevated inflation.”

UBS also highlights that countries around the world are now hesitant to increase their US dollar reserves following the weaponization of the American currency.

Last year, Russia’s Finance Minister reportedly said that the US and its allies have frozen $300 billion worth of the European giant’s gold and foreign exchange reserves as part of the sanctions over the military conflict in Ukraine.

Says UBS,

“In fact, the US decision to freeze Russian foreign exchange reserves in the aftermath of the war in Ukraine may have led to a long-term impact on the behavior of central banks.”

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