MIAMI (Reuters) - Central banks remain keen buyers of gold to diversify their reserves for financial or strategic reasons, representatives of three central banks told the London Bullion Market Association's annual conference in Miami on Monday.
Elevated demand for gold from central banks underpinned the price of the non-yielding gold when the global interest rates were high in 2022-2023 and then slowed down with this year's 28% spot gold price rally. China's central bank held back on buying gold for a fifth straight month in September.
Despite the gold rally, representatives of central banks of the Czech Republic, Mongolia and Mexico told the conference that having gold in reserves still matters to them, even though each one of them has their own reasoning.
The importance of gold as a secure asset is increasing for Mongolian reserves, Enkhjin Atarbaatar, head of the financial markets department at the Central Bank of Mongolia, told the conference.
For the Czech National Bank (CNB), gold is viewed as a pure diversifier of reserves, Marek Sestak, deputy executive director of the risk management department at the CNB, said.
All three said that they were not currently active in gold derivatives and that London remained the main storage location for their gold as a trading hub, while only Mongolia had limited appetite for repatriation of gold to store it at home.
Global central banks increased purchases for their reserves by 6% to 183 tons in the second quarter, according to the World Gold Council, and are on track to slow buying in full 2024 by 150 tons from 2023.