The Bank of Ghana (BoG) has revised its gold purchase target for this year in a latest attempt to significantly shore up its holdings of the precious metal.
The bank will add about 217,000 ounces of gold from local mines by the end of the year instead of the 10,000 ounces originally projected, according to 3Business sources inside the bank.
This comes on the back of commitment by all the 13 major mines in the country to sell more than 50,000 ounces of gold to the central bank, persons in the deal have told 3Business.
Perseus Mining has reportedly signed a deal with the BoG to deliver 15,000 ounces, with Newmont selling additional 5,000 ounces to the regulator, after becoming the first local mining firm to sell (3,500oz) to the bank this year. The rest of the 11 large-scale gold producers will sell between 5,000oz to 10,000oz to the BoG.
The transaction, if it goes through, will add about 1.5 metric tonnes of gold to the central bank’s reserves, pushing its stagnant holdings (8.77 tonnes) of the yellow metal to about 10.20 tonnes.
The latest deal will mark a major step not seen in the bank’s history of gold reserves, despite Ghana being the world’s sixth largest gold producer and second in Africa.
“Increasing the bank’s gold reserve will help engender investor confidence and give the cedi a strong backing,” financial analyst Dr Paul Appiah-Konadu told 3Business.
Domestic Gold Purchasing Programme
The BoG has recently been adding precious metal under its Domestic Gold Purchasing Programme as inflation runs far ahead of its target band of between 6% and 10%, to end July at 31.7%.
The bank aims to leverage a more diversified holdings to strengthen the country’s foreign exchange reserves and balance of payments.
“Through this programme the BOG expects to double its gold holdings in the next five years,” Governor of the central bank Ernest Addison said at the launch of the gold buying programme in Accra.
The appetite for gold among central banks around the world has seen rapid growth since 2021 over concerns about a possible global financial crisis.
Global holdings expanded by 270 tonnes in the first half of the year, with central bankers in developing economies signaling to buy more to diversify their reserve assets.