The Central Bank of Iraq increased the country’s gold reserves by 2% on 25 May as it seeks to gradually build its stock.
The country bought 2.5 tonnes of bullion, or high-purity, gold, which brings the nation’s overall reserves to a total of 132.7 tonnes.
“Our current plan is to buy small quantities over multiple times, not a big quantity in one go,” Mazin Sabah, director general of the central bank’s investments department told Bloomberg.
The move comes as several countries are expanding their bullion resources amid geopolitical and economic uncertainty. The world’s central banks more than doubled their gold buying in 2022, adding 228 tonnes in the first quarter of the year.
Iraq resumed gold purchases in 2022, having stopped for four years, in a bid to diversify its foreign assets. Last June, the central bank bought 34 tonnes of gold, a one-time increase of 35% in its holdings, Bloomberg reports.
According to Sabah, the central bank plans to continue purchasing the precious metal as and when prices reach a level in line with the bank’s guidelines.
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Gold as a “long-term, strategic asset”
Gold, which is more appealing to investors when rates are low, saw dramatic price drops earlier this year and its third consecutive weekly loss earlier this month.
According to a report from the World Gold Council earlier this month, gold demand from central banks fell to 228.4 tonnes in the first quarter, down by 40% from the preceding three months.
“Against the backdrop of turmoil in the banking sector, ongoing geopolitical tensions and a challenging economic environment, gold’s role as a safe haven asset has come to the fore,” said Louise Street, senior markets analyst at the World Gold Council.
“In this landscape, it is likely that investment demand will grow this year, especially with waning headwinds from the strong US dollar and interest rate hikes.”
Street predicts that “central bank buying is likely to remain strong and will be a cornerstone of demand throughout 2023”. Central banks consider gold to be a “long-term, strategic asset” in the face of recession.