Value of BB-held gold, silver reserves surges

Bangladesh's reserve precious metals' value has nearly doubled, driven largely by a surge in global gold prices amid decline in value of reserve-currency dollar, central bankers and economists say.

According to Bangladesh Bank's latest annual report released last week, the combined value of gold and silver reserves in its vault stood at Tk 101.19 billion at the end of June 2024, an increase of over 87 per cent from Tk 53.94 billion recorded in the previous fiscal year (2022-23).

Reports are rife that gold is being reserved by many central banks in the world in the wake of the US dollar downturn following trade and tariff turmoil triggered by Donald Trump's 'reciprocal tariff' regime, resulting in gold-price rises.

As of June 2024, Bangladesh Bank held a total of 458,542.34 troy ounces of gold, in an increase of 7,373.73 troy ounces compared to fiscal year 2022-23.

In contrast, silver holdings remained unchanged at 168,728.15 troy ounces for a second consecutive year.

Notably, the silver stock is kept within the Bangladesh Bank and has not been actively invested.

The majority of the central bank's gold is stored at the Bank of England (BoE), where it is subject to gold-lending operations, according to the report.

As of FY24, 282,463.42 troy ounces (or over 61 per cent) were kept at the Bank of England, over 20 per cent was held at Standard Chartered Bank, London, and 83,339.85 troy ounces or around 18 per cent were stored in Bangladesh Bank's own vaults.

A senior official at the Bangladesh Bank, speaking to the FE on condition of anonymity, said the dramatic increase in the valuation of gold reserves is purely due to the rise in global gold prices, not any major expansion in quantity.

"Gold prices remained high throughout 2024, and the central bank's balance sheet reflected that the trend continues," he said, adding: "We expect another significant revaluation gain in FY25."

Central banks, including Bangladesh Bank, maintain gold as part of their foreign- exchange reserves.

Gold is viewed as a hedge against inflation and a store of value during economic uncertainty, particularly when fiat currencies face volatility.

The surge in gold prices in recent years has been attributed to a combination of factors that include heightened geopolitical tensions, economic uncertainty in major economies, and rising investment demand by central banks.

Global gold prices hovered near record highs in 2024, exceeding $2,400 per troy ounce during the year.

jasimharoon@yahoo.com