Page 19 - RusRPTJul23

Euro Area possess more than half of all official monetary gold, with Russia, China, India, and Turkey being the largest holders among emerging markets.
On average, gold represents 17% of official reserves for advanced economies (down from 80% in 1950) and 7% for emerging markets and developing economies (down from 30% in 1950).
However, some countries have noticeably higher shares of gold in their reserves. Portugal, Kazakhstan, Germany, the United States, Italy, and Uzbekistan have gold accounting for more than 60% of their reserves, while France, Netherlands, Bolivia, Cyprus, Austria, Lebanon, and Greece hold more than 40% in gold. For the Euro Area, including the ECB, gold represents 53% of official reserves as of the end of 2021.
Since 1999, official gold holdings have increased by 7% in volume terms, driven by a 130% increase in tonnes of gold held by emerging markets and developing economies.
Russia, China, Turkey, and India were the largest buyers, while Switzerland, France, Netherlands, and the United Kingdom were the largest sellers.
The increased share of gold in reserve assets for some countries, such as Portugal, can be attributed to changes in total reserves or the significant rise in the market price of gold over the last two decades.The divergent trends in gold holdings between advanced economies and emerging markets can be attributed to the institutional context in which European central banks diversified out of gold. The Central Bank Gold Agreements (CBGA), including the Washington Agreement on Gold, were the frameworks for these gold sales. Advanced economies largely halted substantial gold sales after the Global Financial Crisis.
After the Global Financial Crisis, several emerging markets took steps to diversify their holdings by investing in gold. In recent years, this diversification has gained momentum in certain countries such as Russia and Türkiye. In total, 14 emerging markets can be classified as "active diversifiers," meaning they have increased their gold reserves by at least 5 percentage points over the past two decades. Amongst the central banks that purchased at least onemn troy ounces are Kazakhstan, Belarus, Türkiye, Uzbekistan, Hungary, Iraq, Argentina, and Qatar. It is worth noting that the eight active diversifiers into gold who purchased at least 1mn troy ounces have distinct international economic or political concerns.
Russia and China were responsible for over two-thirds of gross gold purchases and more than three-quarters of net purchases between 2008 and 2017. Over the longer period from 2000 to 2021, they accounted for 51%, according to State Street, which attributes this to "idiosyncratic geopolitical factors." Russia has actively diversified into gold since 2008. China, on the other hand, maintains less than 5% of its reserves in gold, despite significant gold purchases.
Dollar volatility is measured by the standard deviation of monthly returns of a broad dollar index over the preceding five years and has not been particularly volatility over the past two decades. The volatility of gold prices has slightly
19 RUSSIA Country Report July 2023 www.intellinews.com