African central banks' gold rush faces liquidity, price risks, Fitch unit says
Ghana, Tanzania and Nigeria have been buying gold domestically to beef up their reserves, BMI said, a move accelerated by this year's broader market volatility stoked by US trade tariffs and other geopolitical risks.
Policymakers in Kenya and Uganda are exploring a move into gold, Rwanda and Namibia have taken active steps towards adding the metal into their reserves, while Burkina Faso has indicated it will build up its stockpile and Zimbabwe has said its new ZIG currency is backed by gold reserves, BMI said.
"Gold is increasingly being used by sub-Saharan African markets as a strategic store of value," said Orson Gard, senior sub-Saharan Africa analyst at BMI, during an investor presentation.
The move, however, comes with various risks, he said, citing Ghana where an aggressive gold purchase programme has led to the metal accounting for a third of its reserves according to BMI calculations, driving a surge in the cedi currency and potentially making the country's exports less competitive.
Governor of the Bank of Ghana, Johnson Asiama, said on Wednesday that while the West African country was heavily exposed to movements in commodity prices, it was taking measures to protect itself against potential price shocks.
"Any sharp price drop would have impact for international reserves... That is why we are starting with the hedging programme," Asiama told a news conference, referring to an arrangement which is expected to limit consequences of unexpected market fluctuations.
The price of gold, which touched a record high earlier this year, may have peaked, BMI said, and it faces potential downward pressure from any reduction in US interest rates.
"Any sudden drop in global gold prices would have significant implications for those markets in sub-Saharan Africa which have rapidly increased gold as a share of their total reserves portfolio," Gard said.
A gradual price decline over the medium-term could also have a negative impact for countries that started buying gold around its recent peak, he added.
"This would not only weigh on reserve adequacy but would also undermine the perceived credibility of central bank policy," he said.
Ghana and Tanzania, which also rely on gold exports, could be hit by the "double whammy" of a drop in the value of their reserves and lower export earnings, he said.
Governments could also struggle to convert their gold holdings into liquid assets like hard currencies, Gard said, pointing to India and Argentina when they faced acute balance of payments challenges in the 1990s and 2000s, respectively.
Syndigate.info).
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Zawya
4 hours ago
- Zawya
Safe-haven gold touches 2-week peak on trade tensions, rate cut hopes
Gold rose to an over two-week high on Thursday, buoyed by safe haven demand after U.S. President Donald Trump's tariffs went into effect and U.S. jobs data added to rate-cut expectations. Spot gold gained 0.6% to $3,388.09 per ounce as of 0956 a.m. ET (13:56 GMT), after hitting its highest level since July 23 earlier in the session. U.S. gold futures added nearly 0.7% to $3,455.60. "Ongoing trade tensions, and heightened geopolitical tensions continue to underpin the market with the safe haven interest," said Peter Grant, vice president and senior metals strategist at Zaner Metals. Trump's higher tariffs on imports from a slew of countries came into effect on Thursday, leaving some trade partners like Switzerland, Brazil and India scrambling to reach a better deal. Meanwhile, the number of Americans filing new applications for unemployment benefits ticked up to a one-month high last week, hinting at some easing in the U.S. labor market. The data is supportive of rising expectations for Fed rate cuts, said Grant, adding "if the (U.S.) data continue to show weakness, we could see more dovish expectations develop and that is generally supportive to gold as well." Gold, used as a store of value during economic and geopolitical uncertainty, also tends to thrive in a low-interest rate environment. Last week, weaker U.S. payrolls data boosted rate cut bets, with the market now pricing in an over 91% chance of a 25-basis-point rate cut next month, as per CME Group's FedWatch Tool. Three Fed officials sounded the alarm on a weakening U.S. labour market, with Minneapolis Fed President Neel Kashkari on Wednesday saying two quarter-percentage-point rate cuts by year-end is reasonable. Spot silver rose 1.5% to $38.40 per ounce, its highest since July 25, platinum was up 0.2% at $1,335.60 and palladium gained 2.5% to $1,159.93. (Reporting by Sarah Qureshi in Bengaluru; Editing by Shailesh Kuber)
Khaleej Times
5 hours ago
- Khaleej Times
Investing in gold can take various formats as safe haven appeal continues
In case you missed it, the price of gold hit an all-time high a few months ago when it reached $3,500 an ounce. Prices have climbed almost 30 per cent within the last 12 months amid a backdrop of geopolitical tensions and economic uncertainty. Gold is traditionally seen as a 'safe haven' so in times of uncertainty, people invest in it. While it may have since dropped from its all-time high, it is trading within a range of around $3,300 to $3,400 as investors remain cautious. Physical gold There are multiple ways of investing in the precious metal. Some people like to hold physical gold but of course this comes with security risks, or costs involved in paying a company to store it securely for you. Mirza Zuhaib Baig is the founder of Just Gold, a Shariah-compliant digital gold platform. He said that last year, everyday investors purchased about 1,186 tonnes of gold bars and coins, worth roughly $91 billion. 'That is more metal than China, the world's top producer, mines in a whole year. So plenty of households still keep physical gold, whether at home or in a safe-deposit box.' And what about gold jewellery? Some see that as a good proxy for investing in gold. Jewellery is the largest segment of demand (1,877 tonnes in 2024, 44 per cent of total demand). 'Yes and no,' says Toby Young, a digital assets strategist. 'Yes, because it has more than one use — a store of value and also something you can wear or use, and no because why would you have a piece of jewellery made which would incur extra costs and charges, and may not be to everyone's taste?' Funds For those looking to invest in gold without buying it physically, there are funds that buy gold but let you invest in them via shares. One popular type are exchange traded funds (ETFs) which have lower costs than traditional mutual funds. The biggest gold ETF is called SPDR Gold Shares (GLD) which owns real gold bars that sit in HSBC's high-security vault in London. The fund posts a daily list of every bar's serial number, weight, and refiner so anyone can see the metal backing their shares. There are also Shariah-approved physical-gold ETFs such as Albilad Gold ETF or TradePlus Shariah Gold Tracker. Gold miners Another way to gain exposure is by investing in companies that mine gold, which include Newmont Corporation and Barrick Gold. Rather than invest directly in a mining company, there are funds and ETFs available that invest in a basket of mining stocks. For example, VanEck Gold Miners ETF is a fund that invests in major gold miners. It also has a fund of smaller gold miners but this comes with added risk. Be aware that it's expensive and complex to mine gold and companies face huge energy and labour costs. Digital gold One exciting development is digital gold, which refers to buying small fractions of physical gold online, usually via apps or online exchanges. Legitimate digital gold platforms will back every unit you buy with physical gold held in a vault. Always check if the platform is regulated and audited, and where the gold is stored. Just Gold's app lets anyone start with Dh10 and own fractional gold stored in a local vault. 'Lower entry tickets and no storage worries make fractional digital gold attractive, especially to younger, mobile-first investors,' says Mirza Zuhaib Baig. Other platforms include SafeGold and BullionVault. Tokenised While digital gold exists online, tokenised gold goes one step further and puts your units on the blockchain in the form of tokens. Many 'real world assets' are being tokenized like property, jets and even racehorses. Gold is now part of this growing list. 'It enables fractional ownership, which can come at a lower price than an ounce, or kg of gold. Some platforms offer fractions of a gram. It is definitely a world that is expanding at the moment, and allows for wider ownership too,' adds Young. The value of gold-backed tokens such as Tether Gold is growing rapidly. Each token can be split into milligrams, so investors can start with the cost of a coffee instead of buying a 1-ounce coin. 'Younger savers who are comfortable with crypto wallets prefer tapping 'Buy 0.05 g' on a phone to visiting a bullion dealer,' adds Baig. Future moves With global trade uncertainty, a weakening dollar, and sticky inflation, gold continues to attract investors seeking stability. Many central banks are also hoarding gold to diversify their reserves. Gold remains a protection against inflation and serves as a portfolio diversifier. But what about price predictions? JP Morgan predicts $3,675 by the end of the year, but crossing $4,000 next year. While Goldman Sachs has a $3,700 price target by the end of 2025. Scott E. Campbell, director at Global Investment Opportunities, says: 'There is a strong case that gold will rise to $3,700 a troy ounce by the end of 2025 as central banks buy many tonnes of the precious metal every month. My opinion is that still more growth to be had over the next 12-24 months.'
Zawya
6 hours ago
- Zawya
The United States (US) Senator Ted Cruz to Discuss Strategic U.S.-Africa Energy Engagement at African Energy Week
African Energy Week (AEW): Invest in African Energies, the continent's premier energy event, is set to welcome U.S. Senator Ted Cruz as a featured speaker at its 2025 edition. Senator Cruz, a senior member of the U.S. Senate Commerce and Foreign Relations Committees and one of Washington's most prominent energy voices, will address delegates in Cape Town, highlighting the strategic value of deeper U.S. commercial and diplomatic engagement in African energy markets. At a time when global powers are racing to secure energy and critical mineral supply chains, Senator Cruz's participation underscores a broader push by the U.S. to reinforce ties with African energy producers, particularly as the continent emerges as a pivotal source of hydrocarbons, LNG and transition minerals. From Nigeria to Namibia, American companies are ramping up activity, yet competition from China, Russia and others has intensified, prompting renewed attention from U.S. lawmakers and policy leaders. On the exploration and production front, U.S.-based companies to the likes of ExxonMobil, Chevron, ConocoPhillips and Vaalco Energy are driving transformational projects in Africa. ExxonMobil is maximizing output at producing fields across the continent, through projects such as the Erha and Owowo fields in Nigeria and the Kizomba deepwater development in Angola's Block 15. On the gas front, ExxonMobil is leading projects such as the Rovuma LNG development in Mozambique, targeting 18 million tons per annum. The company plans to reach a final investment decision in 2026. Meanwhile Chevron is driving exploration in West and Southern Africa through projects in Nigeria's Niger Delta, Equatorial Guinea's offshore Blocks EG-06 and EG-11 and Namibia's Walvis Basin. The company has also expanded gas production capacity in Angola through the Sanha Lean Gas Connection Project and the upcoming New Gas Consortium project. Houston-based ConocoPhillips strives to reach between 600,000 barrels per day (bpd) and 700,000 bpd at the Waha concession in the Sirte Basin. The company is prioritizing collaborations, work-over programs and pipeline integrity at the concession, which currently produces 375,000 bpd. Another Houston-based player, Vaalco Energy, is modernizing FPSO infrastructure in Africa to support production growth. The company is active in Ivory Coast and Gabon, where it plans a drilling campaign in 2026 and 2025 respectively. In Egypt, Vaalco Energy brought five wells online in 2025, while in Equatorial Guinea, is targeting first oil at Block P in 2026. U.S.-based service providers are also strengthening their presence across the African market. Baker Hughes's African footprint includes markets such as Nigeria and Namibia, where it offers world-class oilfield services and skills development programs. NOV is involved in strategic initiatives across the African energy value chain, from offshore exploration and production to processing and logistics. Focusing on digitalization and efficiency, Halliburton supports a variety of African energy projects. The company brings advanced technology solutions to enhance production efficiency and optimize resource extraction. Stepping into this picture, Senator Cruz's participation at AEW: Invest in African Energies is expected to further strengthened U.S.-Africa energy ties. Known for his strong advocacy of energy independence and market-driven growth, Senator Cruz's message at the event is expected to center on expanding private-sector investment, supporting American energy companies operating in Africa, and bolstering energy infrastructure that aligns with both African development goals and U.S. strategic interests. His appearance follows recent signals from Washington – including a bipartisan call for deeper energy cooperation with Africa – as the U.S. seeks to reclaim ground in a region critical to global energy security. 'Being a Senator from Texas, Senator Cruz not only understands what oil and gas means to the economy of Texas but also for the transformation of Africa. Senator Cruz speaking to energy industry and African leaders sends a loud message: the U.S. is not sitting out the future of African energy. He understands the stakes – from gas deals in to infrastructure buildouts– and his presence proves America is serious about competing, investing and showing up where it matters,' states NJ Ayuk, Executive Chairman of the African Energy Chamber, adding that Senator Cruz recognizes that the key to African countries' economic prosperity lies in embracing free markets, minimizing government intervention, promoting individual responsibility and upholding the rule of law. 'We at the AEC strongly believe that markets – rather than pseudo-intellectuals – should drive the future and foster innovative growth and development,' he notes. His participation comes as African nations are seeking to scale production, expand infrastructure and attract capital to meet growing domestic and global energy demands. The U.S., with its technological expertise and investment capital, is poised to play a pivotal role in supporting Africa's ambitions, from deepwater exploration to gas-to-power projects and beyond. With major discoveries across oil, gas and hydrogen, and a wave of African governments prioritizing energy security and local beneficiation, the continent is ripe for strategic partnerships built on mutual interest and long-term impact. As AEW: Invest in African Energies 2025 approaches, Senator Cruz's participation is expected to galvanize support for deeper U.S. involvement in African energy markets and sends a clear signal to American companies: Africa is open for business, and the U.S. intends to compete. His presence is also likely to draw increased attention from private investors, service providers and project developers seeking access to emerging upstream and infrastructure opportunities across the continent. Distributed by APO Group on behalf of African Energy Chamber. About AEW: Invest in African Energies AEW: Invest in African Energies is the platform of choice for project operators, financiers, technology providers and government, and has emerged as the official place to sign deals in African energy. Visit for more information about this exciting event.
