The French bank sees potential, especially among the central banks of the developing world, as some states seek to reduce their dependence on the US dollar. The role of the world's reserve currency has come under the spotlight due to the military conflict between Russia and Ukraine, as the US dollar has been used as a weapon through economic sanctions against Russia.
According to analysts, the central banks of industrialized countries (primarily Western ones) already have significant gold reserves, but the situation is different in emerging markets. Emerging-country central banks are reported to hold only about 3% of their reserves in gold on average.
“If our reasoning turns out to be correct and the Central Banks of countries outside the Organization for Economic Co-operation and Development (OECD) increase their gold holdings by, say, 5% - theoretically they could be much higher, given their current very low volume compared to with the Central Banks of the OECD countries - this will be equivalent to 475 tons of gold or 13% of gold production in 2021," the bank said in a statement.