FX.co ★ Bank of Ghana enters the gold market

The African nation announced last week that it would launch a domestic gold buying program in September. The central bank said it would pay for the precious metal at market prices but make payments online.

Ghana's Vice President Dr. Mahamudu Bawumia said the new program represents a significant and sustainable addition to Ghana's foreign exchange reserves and will strengthen the country's balance of payments.

The new program has been in development for over a year. In a June 2021 presentation, Bank of Ghana Governor Ernest Addison said the plan would allow the country to double its gold reserves over the next five years.

The central bank said that, along with building foreign exchange reserves, the program will also support the national gold mining industry.

Ghana is the largest gold producer in Africa and the sixth largest in the world. Last year, the country produced over 117 tons of gold.

Ghana has become the latest central bank to announce plans to increase its gold reserves. Earlier this year, a World Gold Council survey showed that of 57 central banks, a quarter planned to add more gold to their foreign exchange reserves. Much of the demand comes from central banks in developing countries.

Many economists and market analysts view the growing interest of central banks in gold as part of growing de-dollarization trend. Countries are trying to reduce their dependence on the US dollar.