Gold ‘coveted asset’ as inflation hedge

14 May 2024

Gold remains a “coveted asset”, with investment in gold jumping by 18% to 4,741 tonnes in 2022 amid an environment of high inflation, according to City Index.

With 2023 having been an excellent year for gold investments, City Index said 2024 also promises “substantial opportunities”, with the precious metal acting as a hedge against inflation and a means to diversify portfolios amidst economic uncertainties.

A recent study by City Index found that a number of European countries have significantly bolstered their gold reserves over the past decade. Hungary led the way with a 2968% increase in gold reserves between 2013 and 2022. It was followed by Poland, which saw a 122% increase and Ireland which also boosted its reserves by 101% over the 10 year period.

However, the UK was not among those countries increasing their gold reserves, with just a marginal increase of 0.01%. Gold reserves in the UK have increased from 310.25 to 310.29 tonnes in the last decade, the 10th lowest rise in Europe.

The UK’s gold reserves have remained stable since 2013, with levels largely unchanged after the then Chancellor of the Exchequer Gordon Brown sold 56% in 2002, City Index said.

Matt Weller, head of market research at City Index, said: “The surge in gold investment demand in some European countries signals a growing concern among investors regarding the inflationary pressures in the market, prompting individuals to seek a reliable measure of protection against purchasing power risk.

“As central banks continue to use gold as an inflation hedge, it’s not surprising to see individual investors following suit in the form of coins or jewellery, especially in countries such as India and China, where gold has long been considered a traditional store of value.”

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