Central banks around the world hold gold as a reserve currency alongside dollars and other foreign currencies. Historically, central bank reserves were made up of gold, and in the past, the value of a country's currency depended on the gold reserves held by that country's central bank.
After the use of the dollar began in industrial development and trade transactions, central banks transferred their reserves to other countries' currencies and bonds.
Despite this, a portion of each country's central bank reserves is still held in gold.
The US financial institution JPMorgan says that central banks in many countries are converting their foreign exchange reserves into gold rather than keeping them in foreign currencies, i.e. dollars
The report said that gold prices are rising in the global market due to the purchase of gold by central banks of various countries.
By 2024, central banks around the world had a total of 36,200 tons (36.2 million kilograms) of gold reserves, which is 20 percent of the assets held by central banks. However, in 2023, the rate of gold-protected assets was 15 percent.
In 2024, China, Turkey, India, Iraq and Azerbaijan were among the countries that bought 20 tons (20,000 kilograms) of gold in a year.
Economists say that the weakening of the dollar internationally, the decline in interest rates in the United States, the economy and global instability: these are the reasons why investors and countries are looking at gold as a safe asset.
Because unlike other assets such as currencies or bonds, the value of gold does not fall very quickly as a result of any one decision.
JPMorgan says that given the US's volatile trade policy and uncertain geopolitical alliances, it is expected that central banks will add more gold to their reserves in 2025, possibly buying another 900 tonnes of gold.
How much gold does a country have?
It is generally believed that the more gold reserves a country has, the stronger its currency. Many central banks around the world store their foreign assets in the form of gold. According to the World Gold Council, the United States has the world's largest gold reserves. The United States holds a total of 8,133 tons (more than 8.1 million kilograms) of gold, which is 78 percent of its total foreign assets.
According to the IMF, the central banks of the United States, Germany, France and Italy will have 16,400 tons of gold by 2024. More than 70 percent of the foreign exchange reserves of the central banks of the United States, Germany, France and Italy are made up of gold.
China is currently leading the race to buy gold, and for the past two years, China's central bank has been shifting its reserves from other assets to gold. According to the World Gold Council, China's central bank holds 2,298 tonnes (2.298 million kilograms) of gold reserves, which is only 6.7 percent of its total foreign assets.
According to the World Gold Council, China had 2,279 tonnes of gold reserves at the end of 2024. In the first six months of 2025, China bought about 19 more tonnes of gold, while the United States did not buy any gold during this period. In 2023, China bought about 88 tonnes of gold.
In addition to China, the central banks of Poland and Turkey are also buying gold. The central bank of Bangladesh has 14.8 tonnes (14,800 kilograms) of gold reserves. According to the World Gold Council, this is worth more than 150 million and is 5.65 percent of the total reserves.
The central bank of Bangladesh's neighbor India has 880 tonnes (880,000 kilograms) of gold reserves. According to the World Gold Council, India holds gold worth $93 billion, which is 13 percent of India's foreign exchange reserves. Pakistan's central bank also holds gold in foreign exchange assets, along with currencies of various countries.
According to the State Bank of Pakistan, Pakistan holds 6.4 tonnes (6,400 kilograms) of gold worth $7 billion.
Has the price of gold increased due to the US-China war?
The price of gold in the international market has declined slightly this month after reaching an all-time high. Economists believe that geopolitical factors are also behind the decline in prices after reaching a peak in October.
Commodity expert Shams-ul-Islam says that the trade war between the US and China is one of the reasons for the increase in gold prices.
He said that after the US announced its tariff policy, China first bought gold and later, when the price reached a historic level of $4,380 per ounce, they sold gold and made a profit.
Economic analyst Ahsan Mehanti says that the budget for the fiscal year starting from October 1 in the United States has not been approved and the US government has become inactive, as a result of which investors have withdrawn from the US market and invested in gold, which has increased the price of gold. He said that US President Trump is on a tour of Asia.
"Investors are closely watching the US President's Asia tour. President Trump is likely to meet the Chinese President and there is hope that the trade differences will be eased. Therefore, gold prices have fallen slightly for now."
According to Shams-ul-Islam, China and its BRICS allies are playing their cards very cleverly to damage the global trading currency, the dollar.
He said the US tariffs have also hurt the economies of the UK, Europe and Asia, and central banks in many countries, including India, are buying gold to support their currencies.
Source: BBC Bangla Report
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