Eastern European central banks are emerging as significant players in the global gold market, aggressively boosting reserves to shield their economies from geopolitical and economic instability. This regional strategy is part of a broader trend, with global central banks turning to gold amid rising tensions and inflationary pressures.
Poland has positioned itself as the world’s top gold buyer, increasing its reserves to 420 tons by September 2024. Central Bank Governor Adam Glapinski aims to make gold account for 20% of the country’s reserves, emphasizing its role as a safeguard against economic shocks. Poland’s proximity to the Ukraine conflict has heightened its sense of urgency, with Glapinski stating that the reserves are essential for national security.
The Czech National Bank has also been increasing its gold reserves, aiming to double its stockpile to 100 tons within three years. Governor Ales Michl views gold as a stable asset to reduce reserve volatility, despite criticism over purchases made during peak market prices. The Czech central bank holds substantial foreign reserves, amounting to nearly half the country’s GDP.
Serbia has tripled its gold reserves to 48 tons since 2012 under Governor Jorgovanka Tabakovic, closely aligned with President Aleksandar Vucic. Serbia repatriated its gold reserves in 2021 to safeguard them during uncertain times, with Vucic pledging to allocate surplus funds to further bullion purchases.
Similarly, Hungary increased its gold holdings by over 10% this year, citing the metal’s historical and economic significance. The Hungarian National Bank has positioned gold as a cornerstone of its financial stability strategy, reflecting Prime Minister Viktor Orban’s balancing act between Western alliances and closer ties to Russia and China.
Eastern Europe’s focus on gold reflects a broader geopolitical and economic landscape marked by uncertainty. Rising trade tensions, particularly with the potential impact of Donald Trump’s second presidency, and global inflation concerns have made gold an attractive hedge for central banks worldwide.
Goldman Sachs predicts that gold prices could reach $3,000 an ounce by the end of 2025.
