2025 Public Sector Perspectives

Chart 4. Proportion of central bank respondents which expect to increase allocation to gold (In percentage) 0 2 4 6 8 10 12 14 16 18 20 2024 2023 2022 2021 Source: OMFIF 6 Location of gold holdings With geopolitical risks being one of the drivers for holding gold in foreign reserve portfolios, history highlights that the location of gold storage is an important consideration. This was amply demonstrated prior to and during WWI and WWII when significant amounts of gold were shipped to the U.S. and the UK, where much of it still remains. However, this is changing. Physical security and access to a country’s gold are increasing concerns. The trend began about a decade ago when some central banks decided to move some of their gold holdings back from the U.S., the U.K. and France. Among those countries publicly announcing gold repatriation between 2014 and 2020 were Australia, Austria, Belgium, Germany, Hungary, Netherlands, Poland, and Romania. The issue gained greater focus when the G7 countries froze Russia’s FX reserves following Russia’s invasion of Ukraine in 2022. Concern intensified when the G7 countries decided to use frozen Russian assets to fund Ukraine’s reconstruction efforts. 7 Since 2022 countries have increased their repatriation, highlighted by India’s announcement in 2024 that it repatriated about 100 tons of gold back to India from the UK. A recent study shows that 68% of central bank respondents keep their gold onshore, compared to roughly 50% in 2020. 8 6 https://pdf.omfif.org/view/v_4QBoeNP 7 h ttps://neighbourhood-enlargement .ec.europa.eu/news/first-transfer-eu15-billion-proceeds-immobilised-russian-assets-made-available-support-ukraine-today-2024-07-26_en 8 h ttps://www.invesco.com/content/dam/invesco/igsams/en/docs/Invesco-global-sovereign-asset-management-study-2024.pdf Citi Perspectives for the Public Sector 27