Central bank accounting practices for monetary gold - 2022 update

The diversity of monetary gold accounting practices prompted the World Gold Council to undertake a study of central bank monetary gold accounting practices, first published in 2016 and updated in 2022 as Central bank accounting practices for monetary gold – 2022 update. The update adds central banks covered, better aligns practices with accounting frameworks, and expands the number of gold accounting issues covered.

The use of gold in institutional portfolios

To better understand how investors are navigating this complex landscape, we partnered with Coalition Greenwich. They interviewed over 400 key decision makers at global investment institutions on their portfolio allocations and views on markets and gold.

Gold Market Commentary

Gold fell 3.5% in July, leaving it down 2.9% on the year at US$1,753/oz. A strong US dollar and sticky real yields weighed on gold in the first half of July.

Gold Demand Trends Q2 2022

Gold demand softened in Q2. Despite Q2 weakness, strong first quarter ETF inflows fuelled a notable H1 recovery Gold demand (excluding OTC) was 8% lower y-o-y at 948t. Combined with Q1 this took H1 demand to 2,189t, up 12% y-o-y.

Gold Mid-Year Outlook 2022

Investors face a challenging environment during the second half of 2022, needing to navigate rising interest rates, high inflation and resurfacing geopolitical risks. In the near term, gold will likely remain reactive to real rates, which in turn will respond to the speed at which global central banks tighten monetary policy and their effectiveness in controlling inflation.

The Case for Gold in DC Asset Allocations

The traditional Defined Contribution (DC) investment portfolio made up of equities and bonds has worked well for investors for a long time. For much of the last 15 years, the environment that has afforded this success has been driven by central bank actions such as ultra-low interest rates and quantitative easing.

Gold ETFs bounce back to begin 2022 led by North American funds

Global gold ETFs drew net inflows of 46.3t (US$2.7bn, 1.3% of AUM) in January, led by North American funds – partially offsetting the region’s 2021 outflows. These combined with positive flows from Europe significantly outweighed Asian outflows. Overall, net inflows were driven largely by gold price strength and a sharp selloff in equity markets, despite a reversal in the gold price on the back of a hawkish US Fed statement towards the end of the month.