Since the crisis there has been renewed interest in gold’s unique characteristics as a safe haven asset that is nobody’s liability. This, combined with scepticism over prospects for some of the main reserve currencies and a prolonged period of low interest rates, has amplified gold’s appeal. More recently, heightened geopolitical risks have contributed to renewed interest in its ‘safe asset’ quality. Prospects of rising inflation in the US and elsewhere could spur further demand.
As the renminbi becomes more widely used in international payments and settlements, central banks are taking a growing interest in the currency. The shift towards a multicurrency reserve system will be accompanied by a period of heightened financial uncertainty, supporting central bank demand for gold. As a greater range of reserve currencies emerges, gold could play an increasingly important role in the monetary system.