The National Bank of Poland (NBP) continues to be a major buyer of gold in the third quarter of this year, according to data from the World Gold Council. Tavex’s data analysis indicates that the current gold reserves of the NBP amount to 427 tons, making up 17.73% of total reserve assets. This means that less than 3% is still needed to fulfill a long-anticipated plan. But why is the NBP investing so heavily in gold? Is this a strategic decision in times of global uncertainty?
Banks and Gold
The National Bank of Poland has been surprising the gold market. According to Tavex data, the Polish gold reserves increased to 427 tons in October, marking the purchase of almost 7.5 tons of this valuable asset in just one month. This is a significant move, particularly in light of the global slowdown in gold purchases by central banks.
As the World Gold Council (WGC) report indicates, demand for gold from central banks in the third quarter of 2024 was 186.2 tons, marking a drop by a staggering 49% compared to the same period last year when purchases reached almost 364 tons. However, Poland seems to break away from this trend, steadily building up its reserves.
It should, however, be noted that the percentage drop in gold purchases by central banks appears drastic due to the relatively high reference point – the record levels of the past two years. Additionally, according to the WGC, based on certain central banks’ statements, the slowdown was also due to a sharp increase in gold prices from March this year.
In light of these data and the campaign being run by the NBP, many people may wonder why we continue to buy gold and why we need so much of this precious metal? One of the answers could be that these purchases are dictated by a desire to strengthen perceptions of Poland’s financial stability, with the relatively high quantity compared to other countries resulting from our geographic location and potential geopolitical risks at our eastern border. It’s worth remembering that gold serves not only as a security blanket, but also as a crucial element in building trust on the international stage.
Despite the percentage declines and visible slowdown, adding the fourth quarter will still make this year very successful against the historical average, and there is still substantial interest in gold from central banks, with the lead in purchases in Q3 held by none other than the National Bank of Poland, says Tomasz Gessner, chief analyst at Tavex.
Poland Near Its Goal – Gold Still Attracts NBP’s Attention
The global gold rush continues, and Poland consistently marks its presence. For years, the head of the National Bank of Poland has been emphasizing the need to increase gold’s share in national foreign exchange reserves to 20%. After the October purchases, this indicator is nearly 18%, meaning the ambitious plan is within reach.
Will Poland decide to continue purchasing gold after reaching the set goal? The answer to this question will be revealed in the future. However, one thing’s for sure – despite impressive results, there’s still a long way to the world’s front-runners. For comparison, the United States, Germany, and Italy have respectively 8,133.46 tons, 3,351.53 tons, and 2,451.84 tons of gold in their reserves.
Despite recent price drops, monetary gold remains a key element of diversifying foreign exchange reserves globally. The worldwide demand for this metal makes it one of the most sought-after assets, vied by countries across all continents. In times of geopolitical tension, gold becomes a guarantor of financial security for many countries, says Aleksander Pawlak, CEO of Tavex. Poland’s strategy of buying gold is not only a step towards greater financial stability but also a signal that our country places economic security as a priority. In the face of the changing landscape of the global economy and politics, gold continues to be a symbol of value and guarantee of stability, he concludes.
Source: https://managerplus.pl/narodowy-bank-polski-liderem-iii-kwartalu-w-zakupach-zlota-wedlug-wgc-427-ton-zlota-w-rezerwach-94992
