The world’s central banks have acquired a record amount of gold in the third quarter of 2018 since 2015. The biggest buyer was Russia’s Central Bank, according to the World Gold Council (WGC) report.

Over the past three months, global gold purchases totaled more than 148,000 tonnes, up 22% year-on-year, reports the World Gold Council.

The leaders in purchases were Russia (99.2 tonnes of gold) and Turkey (18.5 tonnes).

Russia’s central bank gold reserves surpassed 2,000 tonnes for the first time. Currently, Russia accounts for 17% of the world’s reserves. The value of Russian gold is estimated at more than $78 billion.

Kazakhstan, India and Poland also increased their gold reserves. Hungary increased its gold reserves tenfold in the last quarter (from 3.1 to 31.5 tonnes).

Gold is often considered as a hedge against any fall in value of the US dollar.

During the third quarter, the dollar index ticked up by around 0.7 percent.

The overall net effect was that gold demand in the third quarter was 964.3 tons, 6.2 tons higher on a year-on-year basis.

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The strengthening of the US dollar has caused not only the Russian rouble but also the Turkish lira and other currencies to weaken.

In September 2018, spoke to Professor of Business Economics at Brunel University London Francesco Moscone who explained countries are now purchasing gold as they seek to protect themselves from the US dollar hegemony and its fluctuations.

He said: “Most of the emerging economies have dollar-denominated debt, making them quite vulnerable to further Washington increase in the interest rates.

“This is one of the main reasons why Russia has cut its holdings of US foreign debt by more than half since 2017.”

Professor Moscone explained: “Russia especially has solid reasons for dropping dollars in exchange for gold.

“As Russia is facing political sanctions from western countries in general, it may want to play it safe and bet on gold.

“Unlike currencies, gold cannot be declared ‘worthless’.”

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