2025 Public Sector Perspectives

Return of geopolitical risk The outbreak of COVID-19 created complicated geopolitical tensions. Soon after, geopolitical risks were heightened further by the outbreak of Ukraine-Russia war in 2022, boosting central banks’ demand for gold in turn. As the West imposed sanctions on Russia, countries which were willing to continue to trade with Russia, notably China, India, and Turkey as well as the countries bordering on Russia, saw increases in their gold reserves. The use of gold as a medium of exchange is something not seen on a significant level for many decades. It may become a new trend as sanctioned countries face growing challenges in using the mainstream financial system. Continuing geopolitical tensions and uncertainty concerning the Ukraine-Russia war, heightened tensions in the Middle East and growing frictions in Asia have added to the allure of gold as a safe-haven asset. Chart 1. Historical price of gold (US dollars per troy ounce) $0 $200 $400 $600 $800 $1,000 $1,200 $1,400 $1,600 $1,800 $2,000 $2,200 1915 1920 1925 1930 1935 1940 1945 1950 1955 1960 1965 1970 1975 1980 1985 1990 1995 2000 2005 2010 2015 2020 1910s 1920s 1930s 1940s 1950s 1960s 1970s 1980s 1990s 2000s 2010s 2020s Source: Investing.com 4 Chart 2. Central banks’ gold holdings (World total in tonnes) 37000 38000 39000 40000 41000 42000 43000 44000 45000 46000 47000 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 Source: World Gold Council 5 4 https://www.investing.com/commodities/gold-historical-data 5 https://www.gold.org/goldhub/data/gold-reserves-by-country Citi Perspectives for the Public Sector 25