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U.S. dollar’s share of central bank reserves falls to 54% in 2012: World Gold Council

March 13, 2013, 2:26 PM
Myra Saefong
MarketWatch.com

As the world’s central banks look to diversify their reserve portfolios, they’re cutting back on U.S. dollars and the euro and buying more gold, Japanese yen and Chinese yuan, according to a report released Wednesday from the World Gold Council.

The U.S. dollar’s share of total reserves fell from 62% in 2000 to 54% in 2012, according to the report.

Official reserves of global central banks grew to more than $12 trillion in 2012, from $2 trillion in 2000, the WGC said.

Data showed a significant shift away from the U.S. dollar over that 12-year period, and the share of “other” currencies in reserves has tripled in absolute terms since 2008, it said.

Central bank gold buying in the fourth quarter of 2012 marked the eighth straight quarter of net purchases by the official sector and the highest level since 1964, the WGC said. Gold’s percentage of total central reserve holdings remained constant at 13% between 2000 and 2012.

“Building gold reserves in tandem with new alternatives is an optimal strategy as central banks remain under-allocated to gold and many attractive alternatives are either too small or, as is the case with the renminbi [also known as the yuan], not yet open to broader international participation,” said Ashish Bhatia, manager for government affairs at the WGC.

“Gold has a deep and liquid market with no credit risk, making it one of the most attractive assets for central banks to consider as they diversify away from the U.S. dollar and euro,” he said in a press release.

As of Wednesday afternoon, gold futures for April delivery GCJ3 -0.29% traded $5.10, or 0.3%, lower at $1,586.60 an ounce on the Comex division of the New York Mercantile Exchange, but were up about 0.5% month to date.

– Myra Saefong

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http://blogs.marketwatch.com/thetell/2013/03/13/u-s-dollars-share-of-central-bank-reserves-falls-to-54-in-2012-world-gold-council/