Central Bank books 23.4% gain on gold reserves
The recent surge in gold prices has boosted the value of the portion of Brazil’s international reserves held in the precious metal. Despite not buying gold since 2021, the Central Bank of Brazil (BC) reported a 23.4% increase in the value of its gold holdings this year, reaching $13.7 billion in June.
Gold prices have risen amid escalating global geopolitical tensions in recent years, further exacerbated by the tariff war launched by U.S. President Donald Trump.
Considered a safe-haven asset, gold remains a preferred refuge for investors during periods of uncertainty—a view shared by central banks worldwide, according to the World Gold Council (WGC). A recent survey by the WGC highlighted gold’s performance during crises as the most influential factor for central banks in maintaining gold within their reserves.
The BC’s last gold purchases occurred in May, June, and July 2021, increasing its holdings from 67.4 tonnes to 129.6 tonnes. This accumulation took place during the pandemic, amid concerns about the recovery of the global economy. Since then, geopolitical crises such as the intensification of the war in Ukraine from 2022 and the tariff conflict initiated by Mr. Trump during his second term have continued to influence markets.
The price of a troy ounce of gold (approximately 31.1 grams) averaged $1,834.85 in December 2019, according to London PM Fix data adjusted by Valor Data using the U.S. Consumer Price Index (CPI). By December 2021, the price climbed to $2,045.57, then to $2,676.51 by the end of 2024. Following a 25.3% surge in the first half of this year, it reached $3,352 in late June, according to the London Bullion Market Association (LBMA), the internationally recognized authority on gold trading standards.
With rising prices and a steady stockpile, gold’s share in Brazil’s total reserves has increased. In 2019, prior to the pandemic, gold represented just 0.94% of total reserves. After the last round of purchases, it rose to 2.25% by the end of 2021. Continued valuation pushed this figure to 3.55% by December 2024 and close to 4% currently. Brazil’s total reserves stand at $344.4 billion.
The U.S. dollar remains the dominant asset in Brazil’s reserves but has seen its share decrease—from 86.77% in 2019 to 80.34% in 2021, and 78.45% in 2024.
The Central Bank’s reserve management follows a countercyclical strategy aimed at reducing exposure to currency volatility, with a conservative risk appetite. As outlined in the Annual International Reserves Report, its priorities are, in order: security, liquidity, and profitability. The BC told Valor it monitors a variety of reserve assets, including gold.
Gold purchases are made abroad and settled in foreign currency, in accordance with LBMA standards, which require the metal to be melted, refined, standardized, certified, and stored under internationally recognized protocols. The BC purchases gold in bar form and does not disclose the storage location of its reserve assets.
Andrea Damico, chief economist at research firm Buysidebrazil, said reserves serve as insurance, not as a high-yield investment. “Reserves are there as a hedge, to protect the economy against currency shocks,” she said.
The geopolitical impact on gold prices has been analyzed in studies such as the European Central Bank’s (ECB) report published in June 2025. According to the ECB, the Ukraine war marked a turning point in the factors influencing gold prices. Between 2008 and 2022, gold primarily acted as a hedge against low interest rates or high inflation, typically rising when rates fell. However, since Russia’s invasion of Ukraine, geopolitical risk has taken on a more dominant role. Countries such as China, Turkey, and India have ramped up gold purchases in recent years.
Daniel Teles, partner at Valor Investimentos, noted that gold demand naturally increases during geopolitical turmoil, driving up prices. “We’ve seen Russia, a country at war, increasing its gold reserves. China also made aggressive gold purchases in the first quarter of this year—both nations are directly affected by these geopolitical tensions,” he said.
Ms. Damico added that, since the pandemic, the Ukraine war, and sanctions against Russia, non-Western countries have felt increasingly insecure, driving higher gold demand. She also cited another factor: mounting doubts over the dollar’s role as a reserve currency amid Trump-era trade tensions.
She further pointed to U.S. fiscal challenges, with historically high deficits, as another reason why gold is gaining appeal as a “near risk-free” asset. “In theory, U.S. Treasuries should also be risk-free, but uncertainty created by U.S. trade policy has pushed many portfolio managers—not just central bankers—toward gold,” she said.
Source: https://valorinternational.globo.com/