Central Banks Have Different Outlooks on the Gold Market

in #gold3 months ago

Some central banks are selling off their gold reserves. A few of them are taking profits, while others are channeling the money into the economy to offset the consequences of the pandemic and lockdowns.

According to Budapest Business Journal, the Hungarian central bank recently announced a purchase of 63 tons of gold, effectively tripling the country’s gold reserves from 31.5 to 94.5 tons.

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The central bank of Hungary, officially called Magyar Nemzeti Bank, explained the decision to buy such a large amount of gold saying that it serves the country’s long-term economic and political goals. The announcement also says that the decision to increase the state gold reserves was also influenced by the consequences of Covid-19. The growing global risks and debt burden increase the importance of gold for the national strategy as a protective asset and a means to support the national currency’s value.

The Hungarian central bank stressed the importance of owning gold under the current economic and political conditions. Having enough gold in a country’s vaults increases the level of trust in its economy.

It’s worth reminding that the last time the Central Bank of Hungary purchased gold was in October 2018, increasing the state reserves by 28.4 tons to reach 31.5 tons. As of January 2021, the share of gold in the country’s overall reserves stood at 4.4%, but this figure should be updated soon.

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