In Bangladesh, over the past 10 years, gold investments have grown by more than 37%, totaling about $554 million. On September 7, 2010, the Central Bank (hereinafter - the Central Bank) of the country first acquired 10 tons of gold from the International Monetary Fund (hereinafter - the IMF), investing $403 million to diversify its foreign exchange reserves. The bank increased its gold reserve from 3.5 to 13.5 tons in order to minimize losses from the depreciation of foreign currency caused by instability in the global market. In 2010, the share of gold in Bangladesh's foreign exchange reserves increased from 1.3% to 5%. However, on March 15, 2021, the volume of gold reserves fell to almost 2%.
The former manager of the Central Bank said that, despite the decrease in reserves, yellow metal remains a priority for purchase.
According to official representatives of the Central Bank, the profit from investments in gold as of March 15, 2021 amounted to more than $150 million due to the volatility of yellow metal quotes on the international market. This profit is recorded in the bank's financial report every fiscal year in accordance with international accounting standards. Despite high returns, the bank did not make new investments in the yellow metal in 2020, when many countries increased their investment portfolios in gold to prevent economic risks. The Central Bank is not interested in buying precious metal on the open international market, with the exception of an IMF auction or individual central banks.
According to the World Gold Council, this year, compared to 2010, gold quotes increased from $1,252 to $1,730 - by more than 38%. The price of precious metal reached a historic high of $2,067.15 per ounce in early August 2020, due to economic instability caused by the coronavirus pandemic.
The attractiveness of yellow metal has declined in recent months due to a decrease in cases of coronavirus infection, along with an increase in vaccination programs, an increase in the pace of development of the economies of leading countries and an increase in the popularity of stocks. Over the past six months, gold quotes have fallen by almost 11% - by $213 per ounce. The yellow metal is considered a protective asset during the recession, since its price is less volatile than that of other investments.
According to a study by the World Gold Council, in 2020, representatives of 20% of the world's central banks indicated their intentions to acquire precious metal over the next 12 months. In 2019, this figure was only 8%. Central banks have acquired a record amount of precious metal in recent years. In 2019, they bought about 650 tons of yellow metal. The World Gold Council predicts that demand will be sustainable and precious metal will become in demand in developing countries.
Currently, Bangladesh holds about 14 tons of gold for a total of $43.01 billion, which is almost 2% of its foreign exchange reserves. According to IMF statistics, the country ranks 4th in gold reserves among South Asian countries. In this ranking, India ranks first, with almost 677 tons of precious metal, which is equivalent to 7% of its gold and foreign exchange reserves in value terms. Second place is taken by Pakistan, owning 65 tons of gold, which is 21% of its foreign exchange reserves.
Since Bangladesh gained independence, about 4 tons of yellow metal have been deposited in the Central Bank storage facility by law enforcement agencies as "confiscated gold." The Central Bank of the country officially includes such gold in foreign currency. The Central Bank is not the owner of such gold, but only stores it in the branch of Motijhil and the Bank of England.
Most of the country's foreign exchange reserves "work" in various commercial banks with the highest rating and in long-term dollar bonds. Foreign exchange reserves are also represented in the euro, British pound, Australian, Canadian, Singapore dollars, Chinese yuan and Japanese yen.
Gold is a precious metal with many practical applications, especially in industry. However, most of the demand for it worldwide comes from investors, including central banks.