Singapore boosts gold reserves by 30% in Jan 2023, ranks third for largest gold reserve increase in past decade

Singapore boosts gold reserves by 30% in Jan 2023, ranks third for largest gold reserve increase in past decade

Amid reports that Singapore’s gold reserves have recently increased by 30% in January 2023, City Index can reveal that Singapore had the third-largest increase in gold reserves in the last decade, increasing by 20.68% from 127.4 to 153.74 tonnes.

Although Malaysia is considered to be the most similar country to Singapore by several metrics, Malaysia’s gold reserves have increased by just 6.84% in the same period, a difference of 13.84 percentage points.

The latest increase is the third of several recent significant gold purchases made by the Monetary Authority of Singapore (May 2021, June 2021 and January 2023) and is the biggest single central bank gold purchase of 2023. Whilst this latest increase is not yet reflected in the above data, it is reported that this boosted Singapore’s gold holdings to 198.4 tonnes.

Matt Weller, Head of Market Research at City Index, suggests this surge in gold investment reflects growing investor concerns over inflationary pressures. “As central banks continue to use gold as an inflation hedge, it’s not surprising to see individual investors following suit in the form of coins or jewellery, especially in countries such as India and China, where gold has long been considered a traditional store of value,” says Weller.

China’s gold holdings have seen an impressive increase of almost 91% over the past decade, reaching an all-time high of 2,010.51 tonnes in Q4 2022, representing 3.6% of its total foreign reserves. This rise is widely viewed as a strategic move to reduce China’s dependence on the US dollar and diversify the People’s Bank of China’s holdings.

“China’s significant increase in gold holdings in the last decade is likely an attempt to diversify its foreign reserves away from the US dollar, a move that is consistent with its broader strategic goals. This trend is part of a larger global shift in which countries are increasingly looking to reduce their reliance on the US dollar, and we expect this trend to continue as geopolitical tensions persist,” adds Weller.

Thailand has increased its gold reserves by two-thirds more than Indonesia

Meanwhile, Thailand has also marked a significant growth in its gold reserves over the last decade, increasing by 60.20% from 152.41 to 244.16 tonnes, almost two-thirds more than Indonesia. Despite both countries having similar levels of exported goods, Indonesia’s gold reserves have only increased marginally by 0.64%.

According to the World Gold Council, the demand for gold in Thailand has risen by 40% year-on-year, fuelled by the rebound in tourism.

Taiwan and the Philippines are among the countries not buying more gold

However, not all Asian countries are increasing their gold reserves. South Korea has made only marginal additions to its reserves, while Taiwan and Hong Kong have kept their reserve levels stagnant over the past decade. The Philippines stands out as the only country in the region to reduce its gold reserves, shifting from passive holding to active trading.

This increase in gold reserves by Singapore and other countries underscores the volatile economic landscape and the traditional appeal of gold as a safe-haven asset.

As nations diversify their holdings and reduce their reliance on the US dollar, the trend towards gold seems set to continue.

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