Central Banks to Amass $48 Billion Worth of Gold in 2023 Amid US Dollar Concerns

A new report from banking giant UBS predicts that central banks will accumulate 700 metric tons of gold worth $48.74 billion in 2023. This would be the highest level of annual demand on record dating back to 1950.

UBS cites several factors for the expected surge in demand, including persistent inflation, geopolitical concerns, and the weaponization of the US dollar.

Inflation has been a major concern for central banks around the world in recent months. The US inflation rate hit a 40-year high of 7.9% in February, and many other countries are experiencing similar levels of price increases.

Gold is seen as a hedge against inflation, and central banks are likely to buy more of the precious metal as a way to protect their reserves.

Geopolitical concerns are also driving demand for gold. The ongoing conflict in Ukraine has raised tensions between Russia and the West, and there is a risk of further escalation.

Gold is seen as a safe haven asset in times of uncertainty, and central banks are likely to buy more of the precious metal as a way to protect their economies.

Finally, the weaponization of the US dollar is also a factor driving demand for gold. The US has imposed sanctions on Russia that have frozen billions of dollars of the country’s foreign exchange reserves.

This has raised concerns among other countries that their own reserves could be frozen if they fall out of favor with the US. As a result, central banks are likely to buy more gold as a way to diversify their reserves and reduce their reliance on the US dollar.

The expected surge in demand for gold is likely to have a significant impact on the gold market. Prices are already rising, and they could continue to climb in the coming months.