Research

What are Gold Reserves? 

A gold reserve is, Gold held by a nation’s central bank to back the value of its local currency, throughout the gold standard era, it was used as a guarantee to redeem intentions to pay depositors, noteholders, and trading peers. Additionally, reserves were combined by governments to meet the costs of waging war and to acquire and hold “treasure,” because the policies of the time emphasised the importance of doing so.

After a strong 2020 performance where the price rallied 25% in US dollar terms in an environment where rates fell, gold has been much weaker during 2021, down 5% year-to-date with rising rates. While demand for gold has rebounded, particularly in the jewelry and bar and coin markets, the recent gold price sell-off has been largely driven by the sharp increase in interest rates in global fixed income markets relative to the record lows they reached last year