According to Bloomberg, the Central Bank of Kazakhstan is shifting from being one of the world's largest gold buyers to a seller. The increase in the yield on U.S. government bonds has prompted the country's central bank to reallocate its foreign exchange assets.
Reports indicate that in recent years, central banks around the world have purchased large amounts of gold, driving up gold prices significantly. However, this upward trend has now encountered setbacks, with US Treasury bond yields soaring, reducing the attractiveness of gold as a interest-free asset. Last week, the yield on US ten-year Treasury bonds reached a 24-year high.
Kazakhstan is the eighth largest gold producer in the world, and its central bank has the authority to purchase all the gold produced in the country.
According to Aliya Moldabekova, the deputy governor of the Central Bank of Kazakhstan, since the suspension of gold sales last February, the country’s central bank has increased its gold reserves to 386 tons.
She stated that the current proportion of gold reserves is approximately 78%, which is a high ratio and poses a risk. 'With gold accounting for such a high proportion, our reserve portfolio has become almost purely asset allocation.'
Moldabeikoeva said that the goal of the Kazakhstan Central Bank is to reduce the proportion of gold reserves to 75% by the end of this year. In this reduction plan, half of the reduction will be achieved through the sale of gold-related options, and the other half will be accomplished by selling physical gold.
Since the outbreak of the US-Iran conflict at the end of February, the price of gold has dropped by more than one-fifth. "Market forecasts suggest that there is still room for gold prices to rise further, so we do not want to make overly long-term plans. We will first adjust the proportion of gold reserves to 75%, and then continue to monitor market changes," added Moldabekova. "Although market uncertainty remains high, we expect gold prices to remain slightly higher."
