Kazakhstan’s central bank is taking strategic measures to adjust its gold reserves as global market dynamics shift, as reported by the Greater Houston Partnership. The bank aims to “replenish the foreign-currency part of the reserves, which is invested in highly liquid instruments in external markets” by shifting away from bullion holdings.
Kazakhstan is among several countries that were once major buyers of bullion but are now divesting much of their gold stocks. In 2022, as much as 70% of the central bank’s reserve was composed of gold bullion. However, demand from central banks saw a decline of up to 40% in the first quarter of 2023, largely influenced by the US Federal Reserve’s monetary policy, which significantly impacts the world’s gold market.
The Federal Reserve’s easing of monetary policy has been supporting gold prices, which recently reached up to $1,972 per ounce. This, in turn, is affecting the central bank’s approach to buying and selling gold.
The Kazakh central bank’s deputy governor, Aliya Moldabekova, highlighted that gold prices are highly sensitive to the Fed’s policy decisions. The expectation of a potential interest rate hike by the Fed in July led to a decrease in gold prices from $1,959 to $1,904 per ounce over the past month. Consequently, preliminary data indicates a decline in foreign exchange reserves to $34.5 billion.
In 2011, gold constituted just 10% of Kazakhstan’s reserves. At that time, the government emphasized prioritizing the acquisition of domestic gold products. Kazakhstan is the 13th-largest gold producer globally, contributing approximately 2% of the total global production.
As market conditions evolve, Kazakhstan’s central bank remains vigilant, making strategic adjustments to its gold holdings to maintain a balanced and diversified reserve portfolio.
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