Gold buying by central banks have reached its highest level in three years.
In the third quarter of 2018, approximately $5.82billion £4.49billion) was spent to boost central bank reserves.
According to the World Gold Council (WGC), the buying was offset by heavy selling of gold-backed funds during the same period.
More than 148 metric tons of gold were bought by countries national banks from July 1 to September 30, 2018.
The number is an increase of 22 percent from the same quarter in 2017 and was helped along by a strong US dollar and low gold prices.
The gold buying is led by Russia’s central bank who purchased more than 92 tons of the golden metal.
But central banks across Asia and Eastern Europe have also become a whole lot shinier in the third quarter of 2018.
Turkey and Kazakhstan, as well as India, Hungary and Poland have all began adding to their gold reserves.
READ MORE: PUTIN BUYS GOLD TO WEAKEN US DOLLAR AFTER TRUMP TWEETS ABOUT ITS STRENGHT
Why are banks suddenly buying gold?
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.
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, Express.co.uk 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.”
And in May earlier this year, the Russian central bank’s First Deputy Governor Dmitry Tulin told lawmakers in the lower house of parliament that gold was “a 100 percent guarantee from legal and political risks.”
Countries such as Russia and Turkey have huge US dollar denominated debts that they have accumulated in the past and are now facing the uncertainty of whether the borrowing may come to an end.
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’.”